New Delhi: Mindtree Ltd’s chief executive officer, Rostow Ravanan, denied that some of the company’s independent directors had asked the board to consider Larsen and Toubro Ltd’s (L&T) hostile takeover bid. The current leadership, Ravanan said, had the complete backing of the board.
“The board as a whole has unequivocally and in an emphatic way endorsed the vision and strategy of the leadership for Mindtree," Ravanan said in an interview on Friday. “Independent directors do not have to assess the competency or readiness of the founders. Independent directors have a legal responsibility to comment on the open offer price. That they will do at the appropriate time."
With Mindtree’s founders, who together own just 13.32% of the company, opposed to L&T’s takeover bid, some proxy advisers, including Institutional Investor Advisory Services (IiAS), said the company’s independent directors could give a dispassionate opinion on the transaction.
“Investors may not be in a position to understand all the nuances of the decision. Therefore, IiAS believes the independent directors of Mindtree must provide guidance to the company’s shareholders on whether shareholders should take up L&T’s open offer. It is not necessary that Mindtree’s independent directors toe the line of the company’s promoters: they may have a different view," IiAS said in a note to investors on 19 March.
Ravanan said MindTree’s independent directors would do whatever the law required of them.
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“What I’m given to understand is that the acquirer (L&T) has to make additional information available to the general public, which is called detailed public statement. When the open offer opens is when the independent directors need to make their determination to shareholders on whether in their opinion the open offer price is fair or not as per the legal requirements. So the timing is quite a long way away," he said.
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Mindtree’s eight-member board has four independent directors—Akshaya Bhargava, Bijou Kurien, Milind Sarwate and Apurva Purohit. Executive chairman Krishnakumar Natarajan, chief operating officer N.S. Parthasarathy and CEO Ravanan are the three executive members, while the fourth co-founder, Subroto Bagchi, is a non-executive and non-independent director.
Mint could not immediately reach the four independent directors.
Mindtree’s board is scheduled to meet again on 26 March to consider a share buyback, a move that could push up the acquisition cost for L&T, which last week bought a 20.32% stake in Mindtree from V.G. Siddhartha and two of his affiliate companies for ₹3,269 crore.
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For now, L&T wants to boost its holding in Mindtree to 26%, which will trigger an open offer and get its representative on Mindtree’s board. A board seat will allow L&T to block special resolutions and strengthen its efforts to gain control of Mindtree.
Mindtree’s founders claim they have the support of large institutional investors, which hold a combined 20.2% in the company, implying that shareholders with 33.52% of voting rights, including the promoters, are opposed to L&T’s takeover bid at ₹80 a share.
On Friday, Mindtree shares fell 1.16% to ₹939.00 apiece on the BSE while L&T shares gained 1.54% to ₹1,394.00. The benchmark Sensex shed 0.58% to end the day at 38,164.61 points.
