REPORT ON ISSUE BETWEEN L&T AND

MINDTREE

BACKGROUND
L&T is among the top players in most of the sectors
that it’s present in, with the exception of IT services
where it is not even among the top five. The company
hopes that the acquisition of Mindtree (IT service
Company) will allow it to move up the ladder and get
access to larger deals.
L&T met with Mindtree management a few times and
tried to convince them about the acquisition but
emotions got the better of them and they did not
agree to the proposition.
But VG Siddhartha, Founder of Cafe Coffee Day,
and a 20.3-per cent stakeholder in Mindtree since
its inception, approached the firm a few months back
to sell his stake in Mindtree and saw L&T as the best
fit.

PROBLEM
About six years back , Mindtree founders approached
L&T to buy their stake but they did not show interest.
Now they wanted to buy it from VG Siddhartha ,one of
the shareholder of Mindtree. Mindtree promoters call
this as a hostile takeover and resisted it. But L&T
Chief Executive Officer (CEO) SN Subrahmanyan
said they will pursue the acquisition and ensure that it
gets at least 26 per cent stake in Mindtree.
L&T made a ₹10,733-crore bid on Monday with a
three strategy that includes paying ₹980 a share for a
20.3 per cent stake with Siddhartha; buying 15 per
cent from the public; and making an open offer
at ₹980 a share post the approval of Siddhartha’s
stake buy that could take 30-40 days. If the plan goes
ahead, that’ll get L&T 67 per cent equity in
Mindtree for ₹10,733 crore.
The co-founders of Mindtree seemed upset at
Siddhartha selling his stake. Expressing surprise at
the decision, CEO Ravanan said, “A shareholder
cannot put a company at risk.”

POSSIBILITIES
A hostile takeover by Larsen and Toubro,
unprecedented in the industry, could undo all of the
progress made by Mindtree and immensely set the
organisation back.
The promoter group holds only a 13.3 per cent stake
in Mindtree, whereas 67% is held by L&T now, leaving
them with little option to counter the L&T offer.
They’ve already lost the opportunity to buy out
Siddhartha’s stakes.
Mr Subrahmanyan said their intention is to keep that
company absolutely independent and not to degrade
their progress.
Meanwhile, Mindtree’s co-founders went on the
offensive, saying that if L&T proceeds with its hostile
bid, clients and employees will walk away without any
hesitation.