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L&T Acquires Majority Stake Of 51.8% In Mindtree In First Hostile Takeover In Indian IT Industry

By LawStreet News Network      28 June, 2019 12:00 AM      0 Comments
L&T Acquires Majority Stake Of 51.8% In Mindtree In First Hostile Takeover In Indian IT Industry

Engineering and construction major Larsen and Toubro has reportedly acquired majority control over Mindtree, by gaining 51.8% of shares in the Bengaluru-based IT company. This could be termed as India’s first major hostile takeover.

L&T’s open offer for Mindtree was launched on June 17, 2019, and is set to close today i.e., June 28, 2019. On June 25, 2019, Mindtree's share had reached 48% after Singapore based Nalanda Capital offloaded its entire 10.6% stake in Mindtree. Amansa Capital too, which held 2.77% stake in Mindtree sold its stake through the open offer.

Under the open offer, 73.9% of public shareholders sold their shares to L&T at Rs 980 a share. According to a Mint report, National Stock Exchange (NSE) data showed that 3,79,65,103 shares had been tendered as of 12.30pm on June 26, 2019. L&T had made an open offer to buy shares of Mindtree at Rs 980 a share.

As per reports, Mindtree’s board agreed last week to appoint L&T CEO S.N. Subrahmanyan, CFO R.S. Raman, and senior VP of L&T’s defence business Jayant Damodar Patil to the company’s board.

The process of acquiring Mindtree was started in March when L&T bought 20.32% stake in the company from V.G. Siddhartha, founder of Café Coffee Day and two of his companies.

Subsequently, in next two months, it bought 8.58% stake from other shareholders, which further increased its ownership to 28.9%, after which the open offer started.

In March, Mindtree’s co-founders Subroto Bagchi, Rostow Ravanan, and Krishnakumar Natarajan strongly opposed the hostile takeover, saying that it made no strategic sense. Together, they own 13.32% in the company.

As the E&C major has gained majority control of the company, CNBC-TV18 reports that Mindtree founders have decided to sell their stake and exit the company.

According to the report, some founders may sell their stake in the open offer, while some may stay on for some time and sell their stake over a period of time.

According to Mint report, L&T can buy another 15% of shares as it plans to spend Rs 10,800 crore to own 66% in Mindtree.



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