Mindtree drop buyback as L&T fixes dates for open offer

The Bengaluru-based mid-tier IT services company, Mindtree has dropped off the plans for the buyback, as engineering behemoth Larsen & Toubro has come up with dates for the open offer.

"The Board of Directors of the company, at its meeting held on March 26, 2019, has decided not to proceed with a buy-back of equity shares of the company," the company said in a BSE filing.

The company's board also decided to immediately constitute the Committee of Independent Directors (IDC) recommendation in respect of the hostile takeover bid by L&T for the consideration of the shareholders. All the company's Independent Directors will be Members of the IDC, which will be chaired by Apurva Purohit, Lead Independent Director.

Even though the company didn't offer any reasoning for dropping the buyback offer, but market insiders suggest that the company wasn't able to garner the requisite support for the needed for the buy-back in wake of the open offer.

Section 26 (2-d) of Substantial Acquisition of Shares & Takeover (SAST) Regulations of the Securities and Exchange Board of India (Sebi) rules that upon the public announcement of an open offer, the board of the target company shall not implement any buyback of shares or affect any other change to the capital structure unless the approval of 75% of shareholders by a special resolution through postal ballot is obtained.

The company, according to the sources, was able to garner the support of 23.93% of its shareholders – which includes promoter group owning 13.32% stake and Singapore-based Nalanda Capital, which owns 10.61% stake in the company through two different funds.

Meanwhile, L&T, on the other hand, came up with the finer details of its open offer proposal. The tendering period, for the interested shareholders, will start from May, 14 2019 and will go on till May 27.

The last date of communicating the rejection/ acceptance and completion of payment of consideration or refund of equity shares to the shareholders of the Mindtree is set as June 11.