Will Mindtree’s buyback prevent L&T’s hostile takeover bid? IT major’s board to meet on Wednesday

In a bid to tackle a potential hostile takeover attempt by L&T, even as the conglomerate looks to pick up VG Siddhartha's stake in Mindtree, the IT major has announced that it is considering a share buyback program.

Written by Monika Yadav

Updated: March 18, 2019 12:53 IST

Mindtree, Mindtree shares, Larsen & Toubro Infotech Ltd, Cafe Coffee Day, Baring Private Equity Asia, Mindtree Ltd

Mindtree’s management would prefer the stake not go to Larsen & Toubro because of competitive tensions, one of the people said.

In a bid to tackle a potential hostile takeover attempt by L&T, even as the conglomerate looks to pick up VG Siddhartha’s stake in Mindtree, the IT major has announced that it is considering a share buyback program.

Bengaluru-based software services company, Mindtree is meeting Wednesday to decide on buyback proposal of its shares amid media reports that its non-promoter shareholder VG Siddhartha would be offloading his 21% stake in the software services company and the likely buyer of his shares would be rival IT company L&T Infotech.

Sharing his take on whether the attempt by Mindtree will be successful, Amit Tandon, MD, Institutional Investor Advisory Services said that L&T may finally be able to trigger the open offer. “There’s very little Mindtree can do. The buyback may not achieve its objective. L&T may give them a long rope to adjust to the cultural mismatch,” Amit Tandon told CNBC TV18.

Ashok Soota, former chairman of mid-sized software services company while talking to CNBC TV18 said, “L& T does seem poised to buy all VG Sidhartha shares, going by what the market says. Don’t think L&T needs much efforts to reach 26% to launch an offer…I don’t think stakeholders are going to lose irrespective of what the outcome is,”

Meanwhile one of the co-founders of Mindtree, Subroto Bagchi, who also holds stake of 3.10% in the company tweeted Sunday,“An imminent threat of hostile takeover of Mindtree has made me resign from the Government to be able to go, save the company. I must protect the Tree from people who have arrived with bulldozers and saw chains to cut it down so that in its place, they can build a shopping mall.”

Mindtree informed exchanges Friday about its meeting to be held on Wednesday to consider a buyback proposal but it didn’t give out any other detail like quantum of buyback etc.

Siddhartha, who is a major non-promoter shareholder in the company has a total of 20.38% along with his group companies in Mindtree. While his individual stake in the company is 3.33%, his group companies – Coffee Day Enterprises and Coffee Day Trading have 10.63% and 6.45% respectively in the software services company.

Today on the BSE, Mindtree shares at 11: 06 AM were trading at Rs 958.90, 13.01 points higher than the previous close.

This article was first uploaded on March eighteen, twenty nineteen, at thirty-eight minutes past eleven in the morning.