L&T wrests control over Mindtree, gets three board positions

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Mumbai | Updated: June 21, 2019 7:15:38 AM

The proposal cleared by the nomination and remuneration committee and the board will now be put to vote for the shareholders at the company’s annual general meeting to be held on July 16, according to a notice on the Bombay Stock Exchange (BSE).

While Mindtree promoters kept spurning L&T’s overtures, the latter kept up its efforts.

Larsen and Toubro (L&T) seems to have finally acquired a firm control over Mindtree, as the board of directors of the mid-sized IT company on Thursday approved and recommended the appointments of L&T’s CEO and managing director, SN Subrahmanyan, its chief financial officer, R Shankar Raman and JD Patil, senior executive vice-president of L&T’s defence business, as non-executive directors in the company. Also, appointment of two independent directors — MR Prasanna and Deepa Gopalan Wadhwa — has been approved by the board.

The proposal cleared by the nomination and remuneration committee and the board will now be put to vote for the shareholders at the company’s annual general meeting to be held on July 16, according to a notice on the Bombay Stock Exchange (BSE).

The move also brings down the curtains on the hostile takeover saga that started earlier this year. Ever since it became clear in March that L&T will look for a bigger play in Mindtree post its deal with VG Siddhartha and his related entities to acquire 20.32% stake in the IT company, Mindtree promoters had expressed their disapproval of the move by the heavy-engineering major, terming it as hostile, unprecedented and unexplainable. L&T management, however, had maintained an accommodative tone and had stated that they are pursuing the deal with ‘heart’.

While Mindtree promoters kept spurning L&T’s overtures, the latter kept up its efforts.

After announcing the definitive share purchase agreement with Siddhartha, L&T had mandated its brokers for on-market purchase of up to 15% of share capital of Mindtree. Over the last few weeks, the engineering major has been busy shoring up shares in the IT firm. The total shareholding of L&T as on June7, 2019 stood at 28.90%, according to shareholding data on the BSE.

Apart from the delay in commencement of the open offer, as L&T got delayed in sending its responses to the queries raised by the Securities and Exchange Board of India regarding the letter of offer, the takeover battle for the IT company has been a smooth one. The open offer of nearly Rs 5,030 crore for acquisition of over 5.13 crore equity shares representing 31% of the voting share capital of Mindtree at a price of Rs 980 a piece, opened on June 17 and will end on June 28. Earlier, the open offer was supposed to commence on May 14 and end on May 27.

L&T also cleared another milestone last week, as a committee of independent directors of Mindtree, on June 12, recommended the open offer as ‘fair and reasonable’ advising the shareholders to take an informed decision. The four member IDC, was chaired by Apurva Purohit, an independent director of Mindtree and had three more independent directors — Milind Shripad Sarwate, Bijou Kurien and Akshaya Bhargava as its members. Based on the legal provisions, the independent directors’ committee needs to make its recommendations before the open offer opens.

Meanwhile, Subroto Bagchi, co-founder of Mindtree and its executive chairman from 2012-2016, retires by rotation and has not offered himself for re-appointment, the company informed BSE on Thursday. He is a non-executive director on Mindtree’s board. Bagchi, who was most recently serving as the chairman of Odisha Skill Development Authority, had quit the post stating he wanted to steer Mindtree through the current takeover crises.

Mindtree’s share price closed up 0.22% at Rs 973.70 on the BSE on Thursday.

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