Engineering firm Larsen & Toubro Ltd (L&T) has announced an open offer of ₹5,029.89 crore to acquire a 31% stake in mid-cap IT major Mindtree. The open offer, at ₹980 per share, will begin on 17 June and end on 28 June, according to the offer letter filed with the exchange.
L&T said in March that it would increase its stake in Mindtree to 66.32% through an open offer for 31%, and an open market purchase of 15%. This puts the total value of the acquisition at ₹10,700 crore. On 6 June, the company had upped its stake in Mindtree to 28.90%.
On 18 April, L&T announced that buying at least 26% in Mindtree will be its first priority, and critical for the engineering company’s overall aim of raising its stake to 66.32% to gain management control. The ₹10,700 crore deal is India’s first hostile takeover in the IT industry.
L&T signed a definitive agreement to acquire 20.32% from V.G. Siddhartha and his coffee enterprise for over ₹3,000 crore on 18 March. The deal was formalized in late April. L&T began its open market purchase on 30 April.
The initial open offer was slated to take place on 14 May, but was postponed due to a delay in approval by the Securities and Exchanges Board of India.
The market regulator sought clarifications from L&T regarding the open offer. As a result of this delay, the committee of independent directors set up by Mindtree was unable to recommend to shareholders whether or not to take up the open offer.
As per the revised schedule, the independent directors of Mindtree have till 13 June to give their recommendations to stakeholders. The last date for revision of the offer price is 14 June.
The move was against the Mindtree founders, who did not want to be part of a large conglomerate. The weeks leading up to the buyout of Siddhartha’s majority stake by L&T saw the Mindtree founders taking all necessary steps to fend off the hostile takeover bid. This included a buyback of shares or a search for another white knight. The company’s moves failed on both counts.
Mindtree’s shares gained 0.39% to close at ₹969 apiece on Thursday on the BSE while the Sensex gained 0.22% to close at 39,615.90 points.