L&T Finally Controls Mindtree By Acquiring 52.8% Shares: India’s First Hostile Takeover In IT Industry
The construction and engineering major Larsen & Toubro has finally taken over the IT services company Mindtree Ltd. This takeover was the first such attempt by L&T over Mindtree in the Indian software services industry.
In today’s news, we are here to inform you that Larsen and Toubro Ltd has finally acquired a controlling stake of 51.8% in the IT services company Mindtree. This has marked the first hostile takeover in the Indian IT sector and is generally not seen very often.
The 1st Hostile Takeover
The 74-year-old construction & engineering major Larsen & Toubro has successfully acquired a controlling stake of 51% in the Bengaluru-based IT services company Mindtree, months after Mindtree had strongly rejected the takeover offer from L&T, saying that the plan was of no value for the firm or its shareholders.
This is the first hostile bid in the Indian IT services sector, considering that in the Indian corporate sector, unsolicited suitors are usually deterred by founders with large shareholding.
L&T has opened an offer for 31% stake in Mindtree at Rs 980/share, ending on June 28. Through this, shareholders can sell their shares to L&T for ?980 a share. So far, 73.9% of public shareholders have sold their shares to L&T.
How Did L&T Acquire Mindtree After all?
L&T first bought 20.32% stake in Mindtree from the CCD founder V.G. Siddhartha and two of his firms in March, for Rs 32.69 billion and planned to increase its stake to 66%. Since March, L&T kept buying stakes in Mindtree from its promoters. It received a majority share especially after the Singapore-based Nalanda Capital decided to drop its fight and sold its entire 10.61 per cent stake in the IT services firm to L&T in the offer.
In the Wednesday session, the shares of L&T climbed by 2% but those of Mindtree fell by 1%.
The founders of Mindtree own 13.32% in the company, wholly. Last week, Mindree’s three executives from the board decided to allow the senior executive vice-president of L&T’s defense business to join the board. Mindtree also agreed to L&T’s proposal to induct two independent directors, including former L&T executive Prasanna Rangacharya Mysore and former bureaucrat Deepa Gopalan Wadhwa.
L&T has the option to buy another 15% shares as it plans to spend ?10,800 crore to own 66% in Mindtree, making it the first hostile acquisition for the Indian IT industry.