Mindtree founders are making every possible effort to stave off a hostile takeover bid by L&T, which has launched an open offer for 31 per cent company shares after buying 20.32 per cent stake from investor V G Siddhartha. Though the company board has deferred its decision on a buyback plan to thwart the takeover attempt by L&T, action on this front cannot be ruled out. Meanwhile, Subroto Bagchi, one of the promoters of Mindtree, has also made an emotional appeal in a tweet saying that they must protect the “Tree” from people who have arrived with “bulldozers and saw chains” to cut it.
Mindtree, it seems, doesn’t have much option left after deferring the share buyback programme to a future date. As a possible last resort, the company would have to bring in an investor who can take on L&T’s bid that has offered Mindtree Rs 980 per share valuing it at Rs 16,000 crore, according to media report.
The company had announced deferring the share buyback to a future date in a BSE filing, after L&T acquired Siddhartha’s stake in the company. “No decision has been taken in relation to the proposed buyback of equity shares ,” it said even as the company didn’t disclose the date for its next board meeting. Importantly, SEBI doesn’t allow buyback of shares in case of existing open offer.
Mindtree promoters have been resisting strongly against the takeover in order to remain committed “to the long-term vision of building an independent company” and retain its “culture and independence”. It said that the hostile acquisition by L&T would destroy value for shareholders, and the progress made by the company so far. “This is corporate India’s me too moment,” Mindtree promoter Krishnakumar Natarajan said in a press conference.
However, L&T CEO S N Subrahmanyan said that the firm is approaching this deal in good faith, with ‘Dil’ and ‘Pyaar’, responding to queries over the nature of the first ever hostile takeover in Indian IT sector.
“There are emotions involved, but business is business,” Subrahmanyan said at a press conference on Tuesday.
Shares of Larsen and Toubro (L&T) and IT company Mindtree Tuesday fell by 2 per cent after a hostile takeover bid by the former. The stock of Mindtree declined 2.03 per cent to close at Rs 943 on the BSE. During the day, it dropped 2.44 per cent to Rs 939.
L&T had said that Mindtree post acquisition will remain an independent entity and it doesn’t have immediate plans to merge it with its services companies (L&T Infotech and L&T Technology Services).
Source: Financial Express