Bengaluru-based IT major Mindtree, in the midst of a hostile takeover bid by engineering, technology and construction conglomerate Larsen & Toubro, maintained that L&T’s attempt was unprecedented, and that it offered no strategic advantage. Co-founders Rostow Ravanan, Subroto Bagchi and Krishnakumar Natarajan said that all decisions would be taken only after the company’s board meeting on Wednesday.
"You (L&T) are a company with a turnover of Rs 120,000 crore, you are 18 times the size of Mindtree. Why can't you build a great technology business with your resources and capability,” the company's co-founder Krishnakumar Natarajan said.
“We don’t see any strategic advantage in the transaction and strongly believe that the transaction will be value destructive for all shareholders,” the three added.
As part of a presser, Mindtree posed five questions to L&T:
You have chosen to mount the first ever “hostile takeover” in the 50-year-old unblemished Indian IT industry. If you persist in what you are doing, you will be forever remembered for this. Is this how you want to set an example?
You are a company with a turnover of ~120,000 crore rupees. You are 18 times our size. Why can’t you build a great technology business with all your resources and capability without decimating another organisation?
Our customers choose us for our unique culture. They will stall all future business and even take their business elsewhere. In the process, you would have demolished shareholder value for both companies. Is that the right thing to do?
This is a people business. Our people have signed up for a mission and not just a salary. Take their mission away and they will go. What would you be left with?
If companies like you behave with extreme hostility to first generation entrepreneurs what message are you giving to all start-ups in the country?
While the three co-founders posed questions to L&T, they remained mum on what their plan to thwart the bid may be.
"We will hold discussions with all the stakeholders. Our Independent Directors will set up a committee and evaluate the deal," Rostow said.
“Is this deal done by reckless pursuit of scale or driven by ego is a question that needs to be answered because in our industry today, scale is irrelevant for a customer,” Rostow added.
On Monday, L&T announced that it bought a 20.3% stake in Mindtree from Café Coffee Day founder VG Siddhartha, and was looking to acquire an additional 15%, post which it will make an open offer to acquire an additional 31%.
As the open offer was triggered, the co-founders at Mindtree said that it was up to their independent directors to decide whether they support the open offer or not.