IT firm’s committee of independent directors advises shareholders to take an informed decision
Recommending the open offer made by Larsen and Toubro (L&T) for acquiring 31% stake in Mindtree as “fair and reasonable”, the independent directors’ committee (IDC) of the mid-sized IT firm has said that the offer is in accordance with the regulations prescribed under Sebi’s takeover regulations.
“The shareholders of the target company are advised to independently evaluate the open offer and take an informed decision about tendering the equity shares held by them in the open offer,” said a BSE filing on Tuesday. In March, L&T had mounted a hostile takeover bid on Mindtree after entering into a deal to buy Cafe Coffee Day owner VG Siddhartha’s 20.32% stake in the Bengaluru-based firm and also placed an order with brokers to pick up another 15% of the company shares from the open market.
The company has been under media and investor spotlight for months now — first on account of the takeover drama that unfolded earlier this year and more recently when Mindtree’s board in mid-April proposed to pay a special dividend to shareholders, including promoters, that along with regular dividend and tax components would strip the mid-sized IT firm of about `530 crore. In what could now be a fillip to L&T’s ongoing takeover bid for gaining majority control over Mindtree, the IDC, giving its reasons for recommendations, said the closing market price of `975.50 and `974.65 of the equity shares of the target company (Mindtree) on NSE and BSE, respectively, as on the date of this recommendation, which is June 10, 2019, is lower than the offer price of `980 made by the heavy engineering company.
“Based on the review of the public announcement (PA), DPS, draft letter of offer (DLoF), letter of offer (LoF), and the report dated June 7, 2019, issued by ICICI Securities to the IDC in regard to the offer price, the IDC is of the opinion that as on the date of public announcement, the offer price of `980 offered by the acquirer is in accordance with the regulations prescribed under Sebi (SAST) regulations; and appears to be fair and reasonable,” according to the filing.
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.
According to the disclosures about the IDC members in the BSE notice, none of the IDC members hold any equity shares or other securities of Mindtree. While Purohit holds 1,125 equity shares of acquirer (L&T) and 220 equity shares of L&T Technology Services, a subsidiary of L&T, Kurien holds 450 equity shares of L&T, it said.
The disclosures further states that none of the members have entered into any contract or have any relationship with Mindtree, apart from being on audit, remuneration, nomination, CSR, stakeholders relationship and risk management committees. Akshaya Bhargava is the executive chairman, a director and the majority shareholder of a UK-registered company Bridgeweave, to which Mindtree provides certain IT services.
The IDC recommendations come after L&T had put out its delayed letter of offer for Mindtree shares on June 7, without raising the `980 a share offer price and said that there were no competing offers for the mid-size IT firm. The last date by which the IDC was required to give its recommendation to Mindtree’s shareholders for this offer was June 13. FE had reported on June 1 that since the open offer was back on the cards after getting delayed from the earlier date of May 14, the IDC might soon submit its recommendation in respect of the offer by L&T for the consideration of the shareholders. Based on the legal provisions, the independent directors’ committee needs to make its recommendations before the open offer opens.
With the recommendations made, the open offer of nearly `5,030 crore for acquisition of over 5.13 crore equity shares, representing 31% of the voting share capital of Mindtree, will now open on June 17 and end on June 28.