Larsen & Toubro (L&T), India's engineering powerhouse, has announced it will acquire a 21% stake in E2E Networks, a specialized AI cloud services provider, for ₹1,327 crore in an all-cash deal. The deal is a strategic move aimed at expanding L&T's footprint in the AI-driven cloud computing space.

The deal includes the purchase of 4.17 million equity shares, out of which 5% of E2E Networks' shares will be acquired via preferential allotment at ₹3,622.25 per share, totalling ₹1,079.27 crore. An additional 6% stake will be purchased from one of E2E's founders at ₹2,750 per share for ₹327.75 crore.

The deal also involves two-pronged approach which wacill see L&T entering a strategic partnership with E2E networks that will provide L&T with enhanced capabilities to offer advanced cloud solutions for various enterprise needs.

The deal includes planned software licensing and reseller agreements with E2E that will facilitate deeper collaboration between the companies. The combined expertise will provide both companies a competitive edge in AI-driven services. The acquisition is set to be completed by December 31, 2024.

"Collaborating with E2E Networks allows us to offer our clients seamless, scalable, and secure cloud experiences," Seema Ambastha, CEO of L&T's data center and cloud business, said in a statement.

According to Ambastha, the synergy between L&T and E2E Networks will enable L&T to meet the demands of modern businesses for high-performance, AI-driven cloud infrastructure. The sector is witnessing substantial growth and is expected drive growth in other industries as well.

E2E Networks, founded in 2018, has established a reputation for its expertise in CPU and GPU-based cloud computing platforms. These platforms are essential for running intensive AI workloads. The company has partnership with hardware providers like Nvidia that has helped it to provide cost effective and efficient solutions to mid-sized enterprises, startups, and research institutions.

L&T's strategic backing up will help E2E to improve its reach and capabilities and expand its services portfolio along with its infrastructure. According the agreement, post-acquisition, L&T will have the right to nominate up to two directors on E2E's board. This partnership marks L&T's entry into the future of cloud technology and in developing cutting edge AI-based infrastructure and computing solutions.