The battle for Mindtree has entered its decisive phase with L&T announcing an open offer beginning May 14 that will allow the engineering giant to add to the 20.4% stake that it already has. That one move obviously influenced the Mindtree board at its meeting today to drop its plans for a share buyback.

With this the company's promoters find their options to retain control even more limited. That they arrived at this point in their entrepreneurial journey, almost 20 years after they started, can be viewed either as a bitter pill or a testimony to what they have built. Among mid tier IT services firms with revenues around a billion dollars, Mindtree is clearly a prized catch. Consistently profitable despite a not very auspicious start - the dot com crash happened within months of its opening for business followed soon after by 9/11 — it is in the right market segments, has a settled management team and enjoys close ties with its key customers, some of whom it has retained for almost two decades. In a business that is fast becoming commoditized, those are treasured features and L&T which has had Mindtree on its radar for nearly 10 years now, is clearly determined to make it happen this time.

Not that the battle has been won yet. Men like Krishnakumar Natarajan and Subroto Bagchi, two of the company’s promoters in the frontline of this fight, are not the kind to give up easily. They have weathered many a storm including the exit in 2010 of Ashok Soota who was one of the original promoters and the company’s chairman till the time he left, as well two severe market shocks, in 2001 and then again in 2008, following the financial crash.

Over the last five years, Mindtree’s revenue have been growing at a robust 18% each year and shareholders have been rewarded reasonably with two bonus issues besides the rise in the share price. Just how many of them now choose to take up the open offer from a company that despite its keen interest in the IT services business, remains a large engineering behemoth, remains to be seen. To be fair, L&T Infotech under Sanjay Jalona, its CEO since August 2015, has grown rapidly showing that given operational freedom, it is possible for a L&T group company to do well in the widely different business of IT services.

Why the promoters of Mindtree have an anathema to an acquisition by the Mumbai-based conglomerate isn’t quite clear though they have talked about a mismatch in corporate cultures. Yet ever since they diluted their collective stake down to 13%, in their heart of hearts they would have known that a day would come when they would have to make a choice. The only option now available to them is to seek a white knight who can top L&T’s offer price, buy enough stake from the market and then agree to play the kind of passive investor role that V.G. Siddhartha did for nearly 20 years.

The odds are stacked against them. But this is different breed of entrepreneurs who haven’t ever believed in building to sell. Write them off at your own peril.

Sundeep Khanna is a consulting editor at Mint and oversees the newsroom’s corporate coverage. The Corporate Outsider will look at current issues and trends in the corporate sector every week.

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