L&T in talks with CCD founder Siddhartha for stake in Mindtree

  • The talks are also focused on L&T’s plan to buy an additional 5% stake from the promoters of Mindtree
  • Over the past six months, NEC and buyout PE funds KKR and Co. and Baring PE Asia too have evinced interest

Anirudh Laskar
Updated22 Jan 2019, 08:49 AM IST
V.G. Siddhartha and two affiliate firms of Café Coffee Day own a 20.4% stake in Mindtreepriyanka parashar/mint
V.G. Siddhartha and two affiliate firms of Café Coffee Day own a 20.4% stake in Mindtreepriyanka parashar/mint

Engineering and construction conglomerate Larsen and Toubro Ltd (L&T) has initiated talks to acquire a stake in Mindtree Ltd, joining two private equity (PE) firms and Japan’s NEC Ltd which have also shown interest in the software services company.

L&T is discussing with Café Coffee Day (CCD) founder V.G. Siddhartha the possibility of buying the 20.4% stake held by Siddhartha and two CCD affiliate firms in Mindtree, said two people with direct knowledge of the matter.

The talks are also focused on L&T’s plan to buy an additional 5% stake either through an open offer or directly from the promoters of Mindtree, the people said, requesting anonymity.

They said L&T’s plans for Mindtree were devised a week ago, primarily with the objective of creating an IT consulting and services giant through a merger of Mindtree, L&T Infotech Ltd and L&T Engineering Services Ltd.

“The discussions between L&T and Siddhartha are at an early stage but things are moving fast,” said the first person cited above.

After acquiring a controlling stake in Mindtree, L&T will most likely merge the company with Mindtree’s current and larger rivals L&T Infotech and L&T Engineering to create a company large enough to compete with Infosys, TCS, Wipro and HCL, the person said.

“As part of business strategy, the company does explore various opportunities towards growth. Having said that, your query is entirely based on market rumours. As a policy, we do not comment on speculation,” said a spokesperson for L&T.

L&T is not the only suitor for Mindtree. Over the past six months, NEC and buyout PE funds KKR and Co. and Baring PE Asia too have evinced interest, but the talks have not fructified yet because the Mindtree promoters have been reluctant to pare their stake.

Mindtree’s promoters hold a total of 13.32%, with chairman Krishnakumar Natarajan holding 3.72%, co-founder Subroto Bagchi holding 3.1%, N.S. Parthasarathy holding 1.43% and the CEO Rostow Ravanan holding 0.71%.

“L&T has two options. L&T can just buy Siddhartha and his two firms’ stake and wait for the promoters to agree to sell their stake to L&T at a later stage to enable the latter to make an open offer for gaining control. Or, L&T can buy the 20.4% holding from Siddhartha and if the promoters continue to be reluctant, L&T can buy more shares of Mindtree from the public in the open market whenever the shares correct and increase their holding beyond 25% to get the open offer triggered so that L&T is able to buy at least 26% more to be able to force a takeover of Mindtree,” said the second person.

On 15 January, Mint reported that the promoters of Mindtree are now faced with stay-or-sell dilemma as the company’s largest investor nears a decision to sell his stake. They can either accept buyout offers and cede control, or decide against selling and see their net worth potentially erode, said the report.

Catch all the Budget News , Business News , Corporate news , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.

MoreLess
First Published:22 Jan 2019, 08:49 AM IST
HomeCompaniesNewsL&T in talks with CCD founder Siddhartha for stake in Mindtree

Get Instant Loan up to ₹10 Lakh!

  • Employment Type

    Most Active Stocks

    Indian Oil Corporation

    176.85
    03:53 PM | 25 JUL 2024
    8.1 (4.8%)

    Bharat Electronics

    301.30
    03:59 PM | 25 JUL 2024
    1.15 (0.38%)

    Bharat Petroleum Corporation

    326.00
    03:59 PM | 25 JUL 2024
    11 (3.49%)

    NTPC

    392.05
    03:52 PM | 25 JUL 2024
    -0.5 (-0.13%)
    More Active Stocks

    Market Snapshot

    • Top Gainers
    • Top Losers
    • 52 Week High

    Data Patterns India

    3,391.95
    03:47 PM | 25 JUL 2024
    307.6 (9.97%)

    Jyothy Labs

    547.15
    03:53 PM | 25 JUL 2024
    39.2 (7.72%)

    Tata Motors DVR

    747.10
    03:47 PM | 25 JUL 2024
    45.6 (6.5%)

    Tata Motors

    1,091.05
    03:52 PM | 25 JUL 2024
    63.4 (6.17%)
    More from Top Gainers

    Recommended For You

      More Recommendations

      Gold Prices

      • 24K
      • 22K
      Bangalore
      71,295.00-117.00
      Chennai
      70,534.00-182.00
      Delhi
      70,672.00-44.00
      Kolkata
      70,672.00-44.00

      Fuel Price

      • Petrol
      • Diesel
      Bangalore
      102.86/L0.00
      Chennai
      100.75/L-0.03
      Kolkata
      104.95/L0.00
      New Delhi
      94.72/L0.00
      OPEN IN APP
      HomeMarketsCibilPremiumBudget