TCS signs agreement to merge its Japanese unit with Mitsubishi Corp's IT arm

Apr 21 2014, 14:45 IST
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Management’s outlook on demand and expectation of stronger growth in FY15 remain intact despite a weak Q4FY14. Reuters Management’s outlook on demand and expectation of stronger growth in FY15 remain intact despite a weak Q4FY14. Reuters
SummaryManagement’s outlook on demand and expectation of stronger growth in FY15 remain intact

Tata Consultancy Services (TCS), the country's largest IT services exporter, has signed a deal to merge its Japanese unit with Mitsubishi Corp's IT arm, the company said on Monday.

TCS will hold 51% of the merged company – TCS Japan – while Mitsubishi Corp will own the remainning 49%.

The new entity will be operational from July 2014. It will have over $600 million in revenue in a year and over 2,400 employees during the same period.

TCS paid for the merger using both equity and and $50 million cash transaction.

The transaction values the combined entity estimated at $300 million, subject to certain purchase price and closing adjustments, TCS said in a statement.

“TCS will now have the scale, strong local presence and our full range of global capabilities to serve the Japanese corporations effectively and accelerate our growth in Japan market,”  N Chandrasekaran, TCS's CEO and Managing Director, said.

“We deeply value the partnership with Mitsubishi Corporation and look forward to leveraging our mutual strengths in the Japan market,” he added.

TCS shares touched a high of Rs 1, 790, up 1.14%, during intra day trade on the BSE on Monday. They were trading at Rs 1, 774.80 at 2 pm.

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