The hostile takeover bid of Bengaluru-based mid-tier IT services company Mindtree by engineering behemoth Larsen & Toubro (L&T) might have an adverse impact on the clients of the company, according to analysts.
"Risk to growth/relationship in one/multiple accounts cannot be completely ruled out, especially as the share of L&T starts to creep up and the promoters’ options start thinning out," market advisory Motilal Oswal said in a research note.
Some of Mindtree’s top clients have had long-standing relationships with the company, and its founding leaders have been the face of the company, the report said. Top-10 clients contribute close to 44% of IT company's revenues.
The report also suggested the merger of Mindtree with L&T. "There is little (if any) case for owning two businesses competing with each other in the attractive segment of digital deals," the report said.
Yesterday, L&T had said that Mindtree will remain an independent listed entity, and
possibilities of a merger will be explored after a few years.