L&T acquires 51.8% in Mindtree; heads may roll now
26 June 2019
Engineering and construction major Larsen and Toubro has bought 51.8 per cent stake in IT services company Mindtree in a hostile takeover, thereby gaining majority control over the Bengaluru-based company.
With L&T gaining majority stake, reports say a change of guard at Mindtree is likely to happen soon. It has been reported that talk about replacing CEO Rostow Ravanan is gaining ground.
L&T got the upper hand with the exit Nalanda Capital, the largest institutional investor, which has also come as a huge setback for the founders of Mindtree. Nalanda sold its shares in Mindtree to L&T, helping the company raise its stake to 51 per cent.
The founders of Mindtree now hold only 13 per cent shares in the company. L&T is reportedly reviewing the management performance at board level and is keen on bringing a new CEO to take the company revenue to $1 billion, the Times of India reported.
The newspaper, however, said there is no confirmation of Ravanan leaving as the company has not found a successor yet. L&T has already bagged three seats on the 12-member board and will gain upper hand with its majority stake.
Mindtree’s board agreed last week to appoint L&T CEO SN Subrahmanyan, CFO RS Raman, and senior VP of L&T’s defence business Jayant Damodar Patil to the company’s board.
L&T’s open offer for Mindtree, launched on 17 June, is set to close on 28 June. On Tuesday, its Mindtree stake reached 48 per cent after Singapore-based Nalanda Capital offloaded its entire 10.6 per cent stake in Mindtree. Amansa Capital, which held 2.77 per cent stake in Mindtree also sold its stake in Mindtree through the open offer.
Under the open offer, 73.9 per cent of public shareholders sold their shares to L&T at Rs980 a share. According to a Mint report, National Stock Exchange data showed that 3,79,65,103 shares had been tendered as of 12.30 pm on Wednesday. L&T had made an open offer to buy shares of Mindtree at Rs980 a share.
L&T first began the process of acquiring Mindtree in March when it bought 20.32 per cent stake in Mindtree from VG Siddhartha, founder of Café Coffee Day and two of his companies.
Over the past two months, it bought 8.58 per cent stake from other shareholders, which further increased its ownership to 28.9 per cent, after which the open offer started.