The promoters say that they don’t see any strategic advantage in the transaction and strongly believe that it will be value destructive for all shareholders.

Mindtree promoters condemn unconditionally oppose LTs hostile takeover bid
Money M&A Tuesday, March 19, 2019 - 11:08

After Larsen and Toubro announced that it has agreed to acquire 20.3% stake in Mindtree from Café Coffee Day founder VG Siddhartha, the promoters of Mindtree said they would unconditionally oppose the reported hostile takeover bid by L&T.

The promoters Krishnakumar Natarajan (executive chairman), Subroto Bagchi (co-founder), Rostow Ravanan (CEO) and Parthasarathy N.S. (executive vice chairman and COO), issued a statement saying that the attempted hostile takeover bid of Mindtree is a grave threat to the unique organization they have collectively built over 20 years.

“Since we started the company in 1999, we have built a rock-solid organization that outperforms its peers in IT services, differentiates and innovates through digital, and consistently delivers strong financial results and favorable returns to our shareholders. We’ve also carefully created a differentiated corporate culture made up of our amazing “Mindtree Minds,” which reached the 20,000 milestone this year. A hostile takeover by Larsen & Toubro, unprecedented in our industry, could undo all of the progress we’ve made and immensely set our organization back,” they said.

The promoters say that they don’t see any strategic advantage in the transaction and strongly believe that the transaction will be value destructive for all shareholders.

“Our collective success depends on building and nurturing relationships with our clients and partners. This unexplainable transaction will bring disruption to those relationships and impair Mindtree’s ability to differentiate itself in the market and continue to deliver client value and great shareholder return. We believe that culture needs to be carefully created and nurtured over time, and can’t be bought and sold like any asset,” the statement said.

“We remain 100 percent committed to our long-term vision of building an independent company. We believe it’s in the best interests of our shareholders, Mindtree Minds, and our organization overall to continue opposing this takeover attempt.

In addition, the promoters say there has been a large outpouring of sentiment from Mindtree Minds online at #MindtreeMatters expressing their strong desire to retain the company culture and independence. In the meantime, while this situation unfolds, Mindtree will continue to be laser focused on continuing the stellar work for its clients and delivering great value to them, they said.

Larsen & Toubro announced late Monday that it entered into a definitive Share Purchase Agreement (SPA) with V G Siddhartha and his entities Coffee Day Trading Limited and Coffee Day Enterprises Limited, to acquire 20.32% stake in Mindtree at a price of Rs 980 per share, which will approximately amount to Rs 32.69 billion.

Post this announcement, L&T has placed an order with its broker for on-market purchase of up to 15% of share capital of Mindtree at a price not exceeding Rs 980 per share. Apart from this, L&T has announced an open offer as per SEBI Takeover Regulations (as required under Regulation 3(1) and 4) to the public shareholders of Mindtree to purchase up to an additional 31% of the outstanding shares of Mindtree at a price of Rs 980 per share in cash.

Also read: L&T buys 20% in Mindtree from CCD’s VG Siddhartha, to make offer for majority stake

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