L&T Infotech and Mindtree will remain separate and the open offer will be at ₹980

Larsen & Toubro CEO SN Subrahmanyan and CFO R Shankar Raman announce their company's financial report during a press conference, in Mumbai on Wednesday, July 25, 2018.Photo)
  • L&T management reassured investors after its hostile takeover of Mindtree
  • The conglomerate's IT subsidiary L&T Infotech and Mindtree will operate as separate entities
  • Investors in Mindtree will be given an open offer at ₹980
  • L&T will even consider to buy back shares from Mindtree's investors

Shares of L&T Infotech gained over 3.7% during mid-day trade on Tuesday (March 19) after a reassurance from the L&T managment. "Our intent is to keep both of them separate,” President SN Subrahmanyan said at a press conference after the conglomerate, which spans businesses from infrastructure to information technology, bought a controlling stake in the Bengaluru-based Mindtree.

This will be the first hostile takeover of an Indian information technology (IT) services firm as Mindtree's founders resisted the takeover by L&T.

L&T Infotech, which is the conglomerate's IT subsidiary, has already lost a lot of share value since January when the rumours of the takeover surfaced. Investors fear merging with Mindtree, which has only one large client that is Microsoft, may hurt the performance of L&T Infotech, whose stock price has more than doubled in the last three years and has a significantly wider profit margin of 16% compared to Mindtree's 10%.

However, Subrahmanyan explained that L&T Infotech will continue its existing focus on banking, insurance etc, whereas Mindtree will operate in retail and hospitality.

L&T will buy coffee baron VG Siddhartha's20.4% stake in the the mid-tier IT services company Mindtree for approximately ₹3,300 crore.

L&T also intends to purchase an additional stake of upto 15% from the open market and another 31% from Mindtree shareholders at ₹980 per share.


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