TechM stock plunge post announcing Zen3 acquisition plan

Indian multinational subsidiary of Mahindra Group and IT services major, Tech Mahindra announced that it will acquire 100 per cent stake in US-based software solutions company-Zen3 Infosolutions.

In a press release filed to BSE, Tech Mahindra stated that the board of directors to the company has approved a proposal to acquire hundred per cent stake in Zen3 Infosolutions (America) Inc. for Rs 460 crore (US $ 64 million) in an all-cash deal.

The press note further added that the acquisition would be done directly and through the wholly-owned subsidiary-Tech Mahindra (Americas), Inc.

The two companies signed the acquisition deal on February 24, 2020. According to the agreement, Tech Mahindra will pay US $ 42 million (around Rs 300 crore) at the closing of the deal, tentatively by April 1, 2020 and the remaining amount of $22 million will be paid in a period of three years, depending upon the financial performance of the company.

In a statement, Tech Mahindra said that this acquisition would help the company in strengthening enterprise application practice as Zen3 has a strong capability in AI enablement service, speech solutions, cloud engineering and DevOps.

At 10.32 am on Tuesday, the stock of Tech Mahindra Ltd is trading at Rs 814.30, down by 0.71 per cent against its previous close of Rs 820.15 on BSE.