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Engineering and construction conglomerate Larsen and Toubro Ltd (L&T) has
initiated talks to acquire a stake in Mindtree Ltd, joining two private equity (PE)
firms and Japan’s NEC Ltd which have also shown interest in the software services
company.
L&T is discussing with Café Coffee Day (CCD) founder V.G. Siddhartha the
possibility of buying the 20.4% stake held by Siddhartha and two CCD affiliate
firms in Mindtree, said two people with direct knowledge of the matter.
The talks are also focused on L&T’s plan to buy an additional 5% stake either
through an open offer or directly from the promoters of Mindtree, the people said,
requesting anonymity.
After acquiring a controlling stake in Mindtree, L&T will most likely
merge the company with Mindtree’s current and larger rivals L&T
Infotech and L&T Engineering to create a company large enough to
compete with Infosys, TCS, Wipro and HCL, the person said.
L&T has two options. L&T can just buy Siddhartha and his two firms’
stake and wait for the promoters to agree to sell their stake to L&T at
a later stage to enable the latter to make an open offer for gaining
control. Or, L&T can buy the 20.4% holding from Siddhartha and if
the promoters continue to be reluctant, L&T can buy more shares of
Mindtree from the public in the open market whenever the shares
correct and increase their holding beyond 25% to get the open offer
triggered so that L&T is able to buy at least 26% more to be able to
force a takeover of Mindtree," said the second person.