Happiest Minds shares fall for 5th day as merger concerns weigh
The stock of Happiest Minds Technologies has experienced a significant downturn due to uncertainty related to the ITC Infotech integration. Promoters will cash in, whereas minority shareholders are set to receive shares in the merger. The merger is expected to enhance long-term profitability. Yet, HDFC Securities has downgraded the stock, pointing out the lack of a takeover premium and the…
Happiest Minds Technologies (HMT) shares experienced a five-day decline on stock markets, erasing its three-month gain of 21%, due to concerns surrounding the merger with ITC Infotech (ITCI). The primary obstacle is the ITCI's need for a minimum 25% stake to trigger an open offer, which it fell short of purchasing from HMT promoters for ₹1,330 crore in cash.
Consequently, minority shareholders will not receive cash but will acquire shares in ITCI. The merger, comprising two stages, will not necessitate an open offer for public shareholders. HMT's promoter, Ashok Soota, will retain control post-ITCI's acquisition of 22.1%, funded through a rights issue. Upon completion, ITC will hold 73.4% of the combined entity, valued at ₹18,060 crore.
The merger is anticipated to enhance profitability and profitability in the long term, but HMT's stock will likely face near-term pressure.
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