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

The share-swap deal will help India’s largest engineering conglomerate pare debt, the people said, asking not to be identified as the deliberations are private. The transaction could value the combined business at around US$4.5 billion ($6.11 billion) including debt, and would exclude Sembcorp’s renewable energy business, one of the people said.

L&T is considering moving as much as 100 billion rupees ($1.83 billion) of debt to the merged entity, according to the person. It may eventually seek a separate listing for the power business after the deal, the person said.

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