Mumbai-based conglomerate, L&T Ltd., has increased its overall stake in IT services provider Mindtree Ltd. to 26% by purchasing additional shares in the open market. On Thursday, L&T acquired an additional 1% of Mindtree’s shares at a price of Rs.980 per share. This share purchase is revealed by NSE’s data about bulk deals. However, the data did not provide any information about the seller.
L&T is currently in the midst of a hostile takeover of Mindtree. Mindtree’s founders are strictly against this takeover. This takeover battle started when the engineering major purchased 20.32% shares of Mindtree from Café Coffee Day founder VG Siddhartha at a price of Rs.980 per share. Following this acquisition, the construction major had tasked Axis Capital with the purchase of an additional 15% shares from the open market.
The engineering major is likely to acquire another 9% shares of the IT services provider from the open market in the upcoming days. According to the norms outlined by the Securities and Exchange Board of India (SEBI), an acquiring company must make an open offer to the shareholders of the target company once it has acquired 25% stake.
L&T is expected to make its open offer on May 14 to shareholders of Mindtree to acquire another 31% stake in the company. The company is expected to provide an offer price of Rs.980 per share. With this purchase and open offer, L&T is targeting 66% ownership in Mindtree for an estimated Rs.10,700 crore. The company will achieve this controlling interest if everything goes according to plan.
Mindtree’s independent directors are currently in the process of evaluating the proposal made by L&T Ltd. They are yet to provide their recommendations to their shareholders. Though Mindtree initially considered a share buyback plan, it did not proceed with it. Various factors like SEBI’s approval and legal obligations will be considered while making the recommendation.
Source: Financial Express, Livemint