L&T in talks to merge power business with Sembcorp India

Larsen & Toubro Ltd. is in talks to merge its thermal energy business with the Indian unit of Singapore-based Sembcorp Industries Ltd., according to people with knowledge of the matter.

The share swap deal will help India’s largest engineering conglomerate reduce debt, the people said, asking not to be identified as the deliberations are private. The transaction could value the combined business at around $ 4.5 billion, including debt, and would exclude Sembcorp’s renewable energy business, one of the people said.

L&T plans to transfer up to 100 billion rupees ($ 1.3 billion) of debt to the merged entity, according to the person. He could possibly ask for a separate list for the power sector after the deal, the person said.

Discussions are underway and the details of the potential deal could change or the talks could collapse, the people said.

A representative from L&T did not immediately respond to requests for comment, while a representative from Sembcorp could not immediately comment.

Shares of Sembcorp Industries increased their gains by up to 2.7% following the Bloomberg News report, while L&T trimmed losses and fell 0.5% as of 1:38 p.m. local time.

Rosemary C. Kearney