He is believed to be actively looking to sell his stake and is in talks with several strategic and private equity players, according to the source.
L&T Infotech may be considering to offer a price close to `975 per share for acquiring Cafe Coffee Day founder VG Siddhartha’s near-21% stake in IT services firm Mindtree and is in advanced stages of negotiation, an investment banker aware of the deal told FE.
Siddhartha and entities controlled by him hold 20.41% stake in Mindtree. He is believed to be actively looking to sell his stake and is in talks with several strategic and private equity players, according to the source.
“If L&T Infotech acquires Siddhartha’s stake in Mindtree, they may consider initiating an open offer for 31% of the firm. Following this, L&T Infotech may eventually consider a merger between Mindtree, L&T Technology Services and itself,” the banker said.
L&T Technology Services, part of the L&T Group, is a listed entity and has expertise in engineering design, product development, smart manufacturing and digitalisation. It has a market capitalisation of `16,116.34 crore, according to the BSE as on Friday.
L&T Infotech is a technology consulting and digital solutions company that claims to have operations in 30 countries, according to its website. It was founded in 1997 as a subsidiary of Larsen & Toubro. The company has a market capitalisation of `29,608.70 crore, according to the BSE on Friday.
Mindtree is a technology consulting and services company that began in 1999. Currently, it has a market capitalisation of `15,294.07 crore. Mindtree’s shares closed Friday’s session 2.53% up to `931.35 on the BSE.
“There are synergies between the companies and the three firms combined will form an entity with considerable size and capabilities,” the investment banker said.
Siddhartha is also in talks with private equity firms like KKR, Baring Private Equity Asia and ChrysCapital, according to the source.
In an email response, KKR said it would not comment on the story. Email queries sent on late Friday evening to L&T Infotech, L&T Technology Services, ChrysCapital and Baring Private Equity Asia remained unanswered till the time of going to press. Siddhartha could not be contacted individually for his response.
In the Q3FY19 earnings call, Rostow Ravanan, chief executive at Mindtree, had stated the management team at Mindtree was completely committed, passionate and completely enjoying what they were doing, when asked to comment on media reports pertaining to the stake sale.
“So at this point of time, there is no interest for the Mindtree management team to change any of our plans. I think we are totally, totally focused on making Mindtree even stronger, making Mindtree a memorable company. As far as the plans of shareholders go, we are not privy to it. It is their priority and their prerogative as to make their own financial decisions. So, we are not tracking, not following up, et cetera, with any of our shareholders. So, no comments on our shareholders’ plans, but emphatically want to reiterate that there is no change in the approach by the management team at MindTree,” Ravanan said in the earnings call according to a transcript on Bloomberg.