Analysts upbeat about Satyam-Tech Mahindra merger

8220;The combined entity would have a market cap to the tune of about Rs 17,000 crore and make it the fifth largest infotech company in terms of market capitalisation. With this,it stands a good chance of getting bigger business,bigger projects and bigger clients. Further,it can cater to more project verticals,8221; SMC Global Securities Strategist amp; Research Head Jagannadham Thunuguntla said.

However,he said it will take considerable effort and time for the new entity to reach the league of Infosys or TCS.

8220;Though Tech Mahindra8217;s stake in Mahindra Satyam is presently to the extent of 42.7 per cent,it will be interesting to observe what will be the treatment for this cross holding,8221; he said.

He said one way of handling this is to create a trust to hold these cross holding shares called 8216;treasury shares8217;.

8220;If they follow this route,then the value of these 8216;treasury shares8217; comes to about Rs 4,132 crore,and they can issue these shares in the future whenever they need funds.8221;

Incidentally,this is the route that has been followed and acquisition of other companies or inorganic growth can be expected.

8220;British Telecom,a promoter of Tech Mahindra,will closely watch this space as they hold about 23.20 per stake in it. As the swap ratio is 8.5:1,British Telecom will hold about 11.11 per cent stake in the combined entity,8221; he said.

Overall,Thunuguntla said,it is a merger which may prove to be a win-win for all the parties involved,as this enables Mahindra Group to consolidate their infotech assets under one roof.