Mindtree concedes first round in L&T’s hostile takeover bid, no share buyback; what’s next

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March 26, 2019 5:10 PM

Amid a raging hostile takeover battle IT firm Mindtree has decided against going for a share buyback plan, contrary to expectations. We take a look at key highlights from Mindtree's board meet.

Mindtree defers share buyback plan amid L&T takeover bidMindtree decides against share buyback amid L&T takeover bid.

Amid a raging hostile takeover battle, IT firm Mindtree has decided against going for a share buyback plan, seemingly conceding first round to the engineering giant L&T.  It can decide on the next course of action by 10 May. Notably, Mindtree said that its board has invited views from the Directors on the ‘unsolicited offer’ made by Larsen & Toubro (L&T) for the equity shares of the Company. Infra major Larsen & Toubro has made an open offer to acquire a 31% stake in Mindtree Ltd for a total consideration of Rs 5,030 crore ($730.20 million). 

L&T said that it has offered to buy about 51.3 million (5.13 crore) Mindtree shares at Rs 980 apiece. Responding to this offer, Mindtree said that after detailed deliberation and discussion, the Board has decided to immediately constitute the Committee of Independent Directors (IDC) in the interest of all stakeholders to provide their reasoned recommendation in respect of the unsolicited offer by L&T for the consideration of the shareholders.

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The open offer by L&T opens on May 14th and closes on May 27th. Accordingly, the committee of independent directors at Mindtree will have time till May 10 to give their recommendation to the company’s shareholders with regards to the open offer. Further, L&T could decide to increase the offer price or modify its offer size, by May 13. 

Earlier, Mindtree CEO Rostow Ravanan said that there has been an extensive outpouring of support for Mindtree minds from large institutional shareholders including Nalanda, Amansa and Vanguard. “Nalanda Capital, our biggest shareholder recognises that Mindtree has created exceptional value for all our stakeholders. That is the construct and vision of what we are following, as well as a culture that Mindtree has. We hope that culture is not disturbed, so that the output to clients is not disturbed,” Rostow Ravanan said in an interview to ET Now. According to Rostow Ravanan, investors are of the view that any disturbance to either strategy or culture at this point will lead to differences in performance, and drop in output, he told CNBC TV18.

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