Anand Mahindra plans to merge the information technology businesses of his $15-billion group under the Mahindra Satyam-Tech Mahindra combine, or allow the smaller entities to explore strategic options including sale or merger with an outside entity. This would entail Bristlecone and Mahindra Engineering Services to come under Tech Mahindra or chart an independent course.
The diversified conglomerate, which forayed into IT almost 25 years ago, has mandated investment bankers for this restructuring, said sources directly familiar with the matter. The latest development comes even as the automobile-to-aerospace group is finalizing the merger of Mahindra Satyam — which it acquired through a government sponsored deal — with parent Tech Mahindra.
This will create India's fifthlargest IT services company with revenue topping $2.4 billion, the branding of which is still under wraps. Bristlecone, a US-based enterprise resource planning(ERP) company, came into the group through an acquisition in 2004 and was later merged with Mahindra Consulting Services while retaining the name.
A $60-million topline company, Bristlecone has two business lines — the enterprise implementation business in India and a very high-end, niche supply chain managementbusiness abroad.
"The mandate is that Bristlecone should be either bought out by the Mahindra Satyam-Tech Mahindra combine or be sold to an outside entity," said one of the sources mentioned earlier. Bristlecone turned around this year and its billing rates are higher than most Indian IT companies because of its niche business, sources added.
The same mandate has also been given for Mahindra Engineering Services, which was born from the R&D expertise that went into the Scorpio. "It also has two options — either it can continue and become a focused engineering services company through a merger or acquisition or it can be merged with Tech Mahindra-Satyam combine," said sources.
Sources added that there are several firms that are have shown interest in Bristlecone though nothing has been formalized as yet and no decision has been taken on whether it will be divested or merged in-house. The rationalization of the group's IT business follows the same trajectory that other large conglomerates with multiple IT businesses followed like the Tata Group.
An investment banking source said the likelihood of Mahindras trying to retain a high-value business like Bristlecone under Tech Mahindra was the most likely outcome, but this has to be decided through the boards of Mahindra Satyam and Tech Mahindra.
The diversified conglomerate, which forayed into IT almost 25 years ago, has mandated investment bankers for this restructuring, said sources directly familiar with the matter. The latest development comes even as the automobile-to-aerospace group is finalizing the merger of Mahindra Satyam — which it acquired through a government sponsored deal — with parent Tech Mahindra.
This will create India's fifthlargest IT services company with revenue topping $2.4 billion, the branding of which is still under wraps. Bristlecone, a US-based enterprise resource planning(ERP) company, came into the group through an acquisition in 2004 and was later merged with Mahindra Consulting Services while retaining the name.
A $60-million topline company, Bristlecone has two business lines — the enterprise implementation business in India and a very high-end, niche supply chain managementbusiness abroad.
"The mandate is that Bristlecone should be either bought out by the Mahindra Satyam-Tech Mahindra combine or be sold to an outside entity," said one of the sources mentioned earlier. Bristlecone turned around this year and its billing rates are higher than most Indian IT companies because of its niche business, sources added.
The same mandate has also been given for Mahindra Engineering Services, which was born from the R&D expertise that went into the Scorpio. "It also has two options — either it can continue and become a focused engineering services company through a merger or acquisition or it can be merged with Tech Mahindra-Satyam combine," said sources.
Sources added that there are several firms that are have shown interest in Bristlecone though nothing has been formalized as yet and no decision has been taken on whether it will be divested or merged in-house. The rationalization of the group's IT business follows the same trajectory that other large conglomerates with multiple IT businesses followed like the Tata Group.
An investment banking source said the likelihood of Mahindras trying to retain a high-value business like Bristlecone under Tech Mahindra was the most likely outcome, but this has to be decided through the boards of Mahindra Satyam and Tech Mahindra.
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