Stage set for showdown in L&T’S battle for Mindtree
MUMBAI: Larsen and Toubro Ltd (L&T) on Monday agreed to buy Cafe Coffee Day founder VG Siddhartha’s stake in Mindtree Ltd for ₹3,269 crore, setting the stage for a showdown with the Bengaluru-based company’s controlling shareholders, who are preparing a defence against the hostile takeover.
L&T has agreed to pay ₹980 per share for the 20.32% stake held by Siddhartha and his two affiliate companies, the Mumbai-based engineering company said in a filing to stock exchanges. The purchase price is a 1.8% premium to Mindtree’s closing share price on Monday.
L&T said it would buy an additional 15% in Mindtree from the open market at ₹980 per share, adding it had already placed an order with its broker. If L&T is successful in purchasing the stake, it will trigger an open offer, since takeover norms mandate that the acquirer should offer to purchase shares from the public once its stake crosses 25% in a listed firm.
“The aforementioned market order for share purchase and with the intent to acquire majority stake in Mindtree, L&T has announced an open offer as per Sebi takeover regulations to the public shareholders of Mindtree to purchase up to an additional 31% of the outstanding shares of Mindtree at a price of ₹980 per shareincash,”l&t saidinthe exchange filing, adding that Mindtree would continue to remain an independent listed entity. On Monday, Mint first reported that L&T was set to buy Siddhartha’s entire stake and would attempt to buy an additional 31% to take over Mindtree.
Developments around the Mindtree acquisition occurred in quick progression since last Tuesday when the board of L&T cleared a proposal to acquire Siddhartha’s stake and take over Mindtree. In response, the Mindtree board said on Friday that it would meet on March 20 to consider a buyback of all paid-up equity shares of the company to fend off a hostile takeover by L&T.
On Sunday, Mindtree co-founder and board member Subroto Bagchi rushed back to “save” his company from a hostile bid. He said he had quit his government job as chairman of the Odisha Skill Development Agency to help counter the takeover threat.
“An imminent threat of hostile takeover of Mindtree has made me resign from the government to be able to go, save the company,” Bagchi tweeted.