L&T takes over Mindtree in Indian IT’s first-ever hostile acquisition

L&T takes over Mindtree in Indian IT’s first-ever hostile acquisition
Mindtree. (File Photo: IANS)
  • L&T now has 51.8% stake in Mindtree
  • 73.9% of Mindtree shareholders sold in an open offer by L&T
  • Mindtree shareholder Nalanda Capital offloaded its 10.6% stake to L&T

L&T is known to have taken over controlling stake in IT services company Mindtree, pulling off a rare feat in India --- a hostile takeover.

A large chunk of Mindtree shareholders tilted towards infrastructure major Larsen & Toubro as 73.9% of them sold in the open offer at ₹980 a share. This has given 51.8% stake in the company to L&T, and is known to have made over 20% stake from the offer, which was announced on June 7.

The takeover turned successful after Nalanda Capital decided to offload its 10.6% stake to L&T as a part of the open offer process, on June 24.

Hostile takeovers are not common in India as promoters and the family own majority stake in their companies, leaving few outsiders to ever take control.

Story so far

However, Mindtree is one of the rare exceptions which is held by a clutch of investors and co-founder Subrato Bagchi.

The takeover attempt started in March earlier when L&T purchased 20% stake held by V D Siddhartha, the owner of Café Coffee Day chain for around ₹32.6 billion. After this, the promoters refused a bid to sell their stake, even as L&T said it wanted to increase its shareholding to 66%.

Even as L&T has turned the promoter with a majority stake, during the course of the open offer more Mindtree investors are expected to concede. According to a report by Business Standard, the founder Subroto Bagchi, as well as Arohi Asset Management and Amansa Capital too, are in the process of giving up, to give way to L&T.

Interestingly, L&T itself was once a target of a hostile takeover by none other than Reliance Industries which was then headed by Dhirubhai Ambani in 1987. Kumar Mangalam Birla was also one of the people who had purchased stake in the construction company, in an attempt to take over. However, timely thinking and setting up a trust by its own employees helped buy shares back. The trust is now of its biggest shareholders, after public sector insurance companies and banks.