In ordinary parlance, a hostile takeover shall imply the acquisition of Target Company by the Acquirer which is accomplished by going directly to the company’s shareholders or fighting to replace management to get the purchase approved. A hostile takeover can be achieved through either an open offer or a proxy fight.

There have been very few instances of hostile takeover in our country. Of late, the biggest tussle in the power of control is being witnessed in the Information Technology sector wherein Mindtree Ltd deploying all resources and tactics to fight tooth and nail to fend off L&T takeover attempt. It will be the first-ever hostile takeover move in India’s technology industry for a publicly traded company.

One could say that life has come full circle for Mr A.M. Naik, Current Group Chairman of the L&T who had battled with both Reliance and Birla Groups to thwart a hostile takeover bid for L&T  in the early 2000s. The tables have turned around by L&T with a similar coup attempted against Mindtree, and thus, history is repeating itself.

Instances of Hostile Takeover in India

The inception of hostile takeover in India initiated with London-based industrialist Swaraj Paul who sought to control the management of two Indian companies, i.e. Escorts Limited and Delhi Cloth Mills Limited by picking up their shares from the stock market. The bids were retracted but leaving behinds scars and shock-waves to comparatively complacent and naïve Indian business environment.

Mindtree-Hostile-Takeover-1

In 1998, India Cements Limited (“ICL”) made a hostile bid for RaasiCements Limited (“RCL”) with an open offer for RCL shares at ₹300 apiece at a time when the share price was trading on the BSE around ₹100. The investors felt betrayed by the management as they were left high and dry without providing an opportunity to sell their stake to the acquirer during the open offer. However, ICL to avoid any resentment increased their holding in RCL to 85% by purchasing the shares of investors.

Article is written by Karan Sahi is a Lawyer and Company Secretary by profession. Currently working in Vaish Associates.

In 1998, India Cements Limited (“ICL”) made a hostile bid for RaasiCements Limited (“RCL”) with an open offer for RCL shares at ₹300 apiece at a time when the share price was trading on the BSE around ₹100. The investors felt betrayed by the management as they were left high and dry without providing an opportunity to sell their stake to the acquirer during the open offer. However, ICL to avoid any resentment increased their holding in RCL to 85% by purchasing the shares of investors.

In October 2000, Abhishek Dalmia made an open offer to acquire 45 per cent of share capital in Gesco Corporation at₹23 per share. This transaction became a drama of hostile takeover until the promoters of Gesco and the Dalmia group announced that they had reached an amicable settlement in the battle for Gesco, with the former buying out Dalmias’ 10.5 per cent stake at ₹54 per share for a total consideration of ₹16 crores.

Shareholding Pattern of Mindtree Ltd

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