Ahead of a potential takeover of the company by L&T, Mindtree’s board on Wednesday proposed to pay a special dividend of `20 per share translating into a total payout of over Rs 320 crore to its shareholders, including promoters.
By Bhavik Nair & Srinath Srinivasan
Ahead of a potential takeover of the company by L&T, Mindtree’s board on Wednesday proposed to pay a special dividend of `20 per share translating into a total payout of over Rs 320 crore to its shareholders, including promoters. The company said the move was in line with its capital allocation policy and did not go against corporate governance norms.
Mindtree will, however, seek the approval for its proposal at the forthcoming annual general meeting likely to take place in June or July, but there will be no extraordinary general meeting for the same.
Strongly defending the board’s decision to recommend a special dividend, Mindtree CEO and managing director Rostow Ravanan said, “It does not take off anything whatsoever from our governance processes. This special dividend is to commemorate and celebrate Mindtree’s achievements and the special dividend is anyway subject to shareholders’ approval at the forthcoming AGM.”
By then, L&T could hold significant stake in Mindtree. As is known, last month, L&T had acquired Cafe Coffee Day owner VG Siddhartha’s 20.32% stake in Mindtree, and placed an order with brokers to pick up another 15% shares from the open market.
This triggered an open offer under which L&T will acquire an additional 31% stake at `980 a share. The open offer is slated to begin on May 14 and close on May 27.
Mindtree’s board had recently constituted the committee of independent directors (IDC) to provide their recommendation in respect of the offer by L&T for the consideration of the shareholders. It also decided not to proceed with the buyback of its equity shares. Mindtree had stated that all independent directors will be members of the IDC, and the IDC has elected Apurva Purohit, lead independent director, as the chairperson of the IDC and spokesperson.
During a post-earnings call on Wednesday, Mindtree management told analysts that the independent directors will make their recommendations in due course.
Based on the legal provisions, the independent directors’ committee needs to make its recommendations before the open offer opens, the management said.
On analysts’ queries about the impact of L&T’s potential increase in shareholding on the firm’s operational guidance, the management said that it is difficult for them to comment on an unknown factor like that and difficult for them to estimate or forecast.