L&T versus Mindtree: Major showdown on cards

L&T versus Mindtree: Major showdown on cards

The Indian IT services sector is set for a major showdown as Larsen & Tourbo has made a Rs 5,030 crore open offer to buy 31% of the stake in the Bengaluru-based tech company Mindtree, which latter is vehemently resisting.

In a BSE filling L&T stated that it intends to buy 5.13 crore shares in the tech company at the offer price of Rs 980 per share.

L&T has also agreed to buy 20.15% stake of Café Coffee Day owner VG Siddhartha for Rs 3,269 crore in an all-cash deal, according to the statement issued by the company on Monday. The company has also agreed to buy a further 15% stake of the company from the markets from various shareholders, both retail and institutional, at Rs 2,434 crore.  

Both transactions cost Rs 5,703 crore for the buyout of 5.82 crore shares of Mindtree, that ultimately triggered the open offer.

If the open offer is fully subscribed, L&T would control 66.15% stake in the Mindtree, paying out Rs 10,733 crore for the move, which has been vehemently opposed by the Mindtree promoters, including Krishnakumar Natarajan (executive chairman), Subroto Bagchi (co-founder), Rostow Ravanan (CEO) and Parthasarathy N.S. (executive vice chairman and COO).

“We remain 100% committed to our long-term vision of building an independent company. We believe it’s in the best interests of our shareholders, Mindtree Minds, and our organization overall to continue opposing this takeover attempt,” they said in a combined statement.

In fact, Bagchi, on Monday, resigned from his posting in the Odisha government in order to rejoin the company he co-founded in 1999 to put the hostile takeover on hold.

As of date promoter group hold 13.32% of the company’s shareholding, while remainder rests with the public. Of the total shareholding of the company, 50.57% is held by the institutional investors which include -- Nalanda India Fund, Amansa Holdings and Vangaurd among others.