The boards of Satyam Computer Services Ltd and Tech Mahindra Ltd, IT services providers of the Mahindra group, approved the merger of two companies, according to TV reports. The exchange ratio for the merger was pegged at 2:17 ratio i.e. 2 shares of Tech Mahindra will be given for 17 shares of Mahindra Satyam. After merger 204 million equities will be transferred to trust.

Shareholders will get one share of Tech Mahindra for 8.5 shares of Satyam, the companies said.

The merger will result in combined revenue of about $2.4 billion and more than 350 clients across different geographies and industrial sectors, Tech Mahindra said in a statement on Wednesday after a board meeting to approve the merger.

The move ends a tumultuous journey for Satyam, which had come on the brink of collapse after its former chairman and founder Ramalinga Raju said in January 2009 that profits had been overstated and assets falsified in the country's biggest accounting fraud.

The merger between technology outsourcing firms Mahindra Satyam and Tech Mahindra will lead to the constitution of a new management structure to guide the combined entity, two sources close to the development told ET.

CP Gurnani, who has been credited largely for Satyam's profitability post the takeover by Tech Mahindra will continue to lead the amalgamated firm as its chief executive officer. Vineet Nayyar, who mentored the top leadership through transition as Chairman, will assume a non-executive role once the company stabilizes, absolving himself of overlooking the day to day operations of the company. Sanjay Anand, a Tech Mahindra strong hand will be chief financial officer.

Employees will be permitted to shift across verticals and services after a minimum service period of 18 to 24 months.

Mahindra Satyam is likely to hire a firm to advise the combined entity on operational issues and matters pertaining to strategy and human resources.

Shares of Tech Mahindra surged over 3% on Wednesday. At 10:15 a.m., shares of Tech Mahindra Ltd were trading 3.5% higher at Rs 671.05. The stock has hit a high of Rs 680 and a low of Rs 649.40.

Commenting on the merger Anand G Mahindra, Chairman, Tech Mahindra said "This merger will help propel the combined entity into the top tier of Indian software and services companies, achieving the group's key objective of being in a leadership role in each of our focus business areas."

Vineet Nayyar, Vice Chairman and Managing Director of Tech Mahindra and Chairman of Mahindra Satyam added "This merger is a key part of our strategy to deliver industry leading performance."

The combined entity will be able to better compete with local bigger rivals such as sector leader Tata Consultancy Services and No. 2 exporter Infosys for large outsourcing contracts from global corporations, analysts said.

Billionaire Anand Mahindra purchased Satyam in a government-sponsored sale in 2009 after the founder of the Hyderabad-based software services provider admitted to one of the largest accounting frauds in India. Key highlights of the merger 

> On a pro-forma basis, the Mahindra Group will own 26.3% in the combined entity, British Telecom will own 12.8%, 10.4% will be held as treasury stock, 34.4% to be held by the public shareholders of Mahindra Satyam and the balance 16.1% will be held by the public shareholders of Tech Mahindra.

> Tech Mahindra will issue 10.34 crore new shares, thereby increasing its outstanding shares to 23.08 crore and its equity capital to Rs 230.8 crore.

> The merger will result in the creation of a new offshore services leader with revenues of approximately US$2.4bn in revenues, approximately 75,000+ work force and 350+ clients, across 54 countries