With L&T set to acquire a majority stake in software major Mindtree, it has said that it intends to keep both companies separate, ruling out a merger with its IT company in the near future. However, L&T managing director and chief executive SN Subrahmanyan said that L&T will provide board oversight.
Late Monday night, L&T announced that it bought a 20.3% stake in Mindtree from Café Coffee Day founder VG Siddhartha. It is also looking to acquire an additional 15%, post which it will make an open offer to acquire an additional 31%.
Addressing the media on Tuesday, Subrahmanyan said that the logic behind acquiring Mindtree is to expand its services business and not to integrate it with L&T Infotech and with the objective of increasing shareholder value.
While L&T Infotech is predominant in banking, Mindtree focuses on areas such as retail and hospitality.
“L&T's fundamental approach is to keep businesses as verticals, allowing CEOs to bring in high focus, clarity and objectivity,” he said, adding that L&T Infotech and L&T Tech, which are run independently, are best performing companies.
While this move has been strongly opposed by the promoters of Mindtree, Subrahmanyan said that they will go out of their way to make the deal succeed and that there is room for negotiation with Mindtree promoters. He also gave assurance saying L&T is an 80-year-old company with strong governance values.
Subrahmanyan said that Siddharatha approached them a few months ago to pick his 20% stake in Mindtree. “From our point of view, the move made a lot of sense from an IT portfolio point of view. We also had dialogue with the Mindtree management,” he added.
And while L&T’s acquisition of Mindtree is being called a hostile takeover, Subrahmanyan said that they didn’t coin the term hostile and that the approach should be understood with love and consideration.
“There are some emotions and trepidation involved, but business is business. Emotions play a part, but emotionalities have to be overcome as we go forward. What we are trying to do, is with, if I can use the word ‘pyaar’, and we will continue to look at it as something we are doing from our ‘dil’,” he added.
Meanwhile, the promoters of Mindtree are holding a press conference and earlier issued a statement saying that they will unconditionally oppose the deal.