Engineering major Larsen & Toubro (L&T) on Monday signed a deal with Cafe Coffee Day (CCD) founder VG Siddhartha to buy his 20.32 percent stake in Mindtree at Rs 980 per share for Rs 3,269 crore, the company said in an exchange filing.
The company has also placed an order with brokers to pick up another 15 percent of the company shares from the open market.
Subsequent to these deals, L&T would make an open offer to buy additional 31 percent stake through an open offer, it said.
On March 14, sources told
that L&T approved the acquisition of Siddhartha's 20.4 percent stake in Mindtree at Rs 981 per share. CNBC-TV18,
All the three acquisitions are being done at Rs 980 per share, a premium of 1.8 percent over Monday's closing price of Mindtree on the BSE. Mindtree closed on the BSE at Rs 962.50 a piece.
L&T would pay Siddhartha Rs 3,269 crore and Rs 5,030 crore for the open offer, as per filings made by L&T and Mindtree.
The company would shell out around Rs 2,500 crore for acquiring the additional 15 percent stake. Together, the outgo would be around Rs 10,800 crore, according to a rough calculation.
This would be the first hostile takeover bid in the country's IT sector.
L&T's announcement came even as some Mindtree board members wrote to L&T saying that most of the employees and institutionalised investors are not ready to be the part of the entity that would be controlled by the infrastructure major because of cultural differences.
L&T -- which has two subsidiaries L&T Infotech and L&T Technology Services -- is keen to bring Mindtree under its fold to exponentially raise its client base and product offering.
The acquisition is subject to inter alia receipt of necessary regulatory approvals and satisfaction of other conditions as specified in the offer documents.
"This acquisition is part of our strategy to deliver industry leading IT services to our clients worldwide. It will help propel L&T's technology portfolio into top tier of Indian IT companies. This acquisition will allow L&T to further enhance shareholder value for both its own shareholders and Mindtree shareholders in the medium to long term," said SN Subrahmanyan, CEO and managing director, L&T.
The promoters of Mindtree on Monday said they would unconditionally oppose the reported hostile takeover bid by L&T.
"The attempted hostile takeover bid of Mindtree by Larsen & Toubro is a grave threat to the unique organisation we have collectively built over 20 years. A hostile takeover by L&T, unprecedented in our industry, could undo all of the progress we’ve made and immensely set our organisation back. We don’t see any strategic advantage in the transaction and strongly believe that the transaction will be value destructive for all shareholders," they said.
Founders Subroto Bagchi and Krishnakumar Natarajan, the chairman, and Rostow Ravanan, the CEO of the company, on Monday,
wrote a letter to the L&T board, asking the firm to "cease pursuing Mindtree as a potential target" and alleged that the construction major is signing up for a 'hostile takeover'. Bagchi also announced his resignation his government post — head of Odisha's Skill Development Authority — to save his company from the "threat of hostile takeover" on Twitter on Sunday. Also read: How the Coffee Day founder made up for his Infosys folly with crafty tech bets To avert the acquisition, Mindtree scheduled a share buyback proposal meeting on March 20.
Ashok Soota, another co-founder of Mindtree, in an interview with CNBC-TV18, said the share buyback plan will not be able to dent L&T's effort to acquire Cafe Coffee Day founder VG Siddhartha's stake in the IT company.
Soota said that he does not see the shares buyback achieving much from founders' standpoint, adding that it looks only a part of the financial strategy.
Also read: Why L&T and not L&T Infotech is eyeing stake in Mindtree
"L&T does seem poised to buy VG Siddhartha's stake and I think it's logical for him to exit the company," Soota said, adding that Siddhartha was a " 'White Knight' investor".Mindtree was co-founded by -- Krishnakumar Natarajan, Rostow Ravanan, Subroto Bagchi and N S Parthasarathy.