L&T Clarified It's Stance on Mindtree Acquisition

Larsen and Toubro (L&T) has clarified it had no intention to swallow Bangalore-based Mindtree even as it cobbled a strategy to pick up a 66 per cent stake in the Rs 5,400-crore technology minnow for which it has put together an Rs 10,773-crore war chest.

The L&T honchos tried to cool the frazzled nerves of Mindtree’s promoters by trying to suggest that their overture — which had begun with the acquisition of Coffee Café day promoter V.G. Siddhartha’s 20.32 per cent stake -— ought not to be characterised as an aggressive, predatory bid.

S. N. Subrahmanyan, L&T managing director and chief executive, came up with a cheesy line that would resonate better in a Bollywood film than a corporate feud when he said that the stake buyout plan had been made with “dil and pyaar” (heart and love) and that they hoped to eventually win over Mindtree’s rattled but furious promoters. Subrahmanyan said: “There are some emotions and trepidations… but emotions have to be overcome as we go forward. The senior people in the management are (our) personal friends, good people, men of repute and who have done their best to get Mindtree to where it is today. We feel a lot of positivity and sync in the way to go forward.”

The focus will now shift to Mindtree’s board meeting tomorrow, which is scheduled to discuss a proposal for a buyback of shares. It remains to be seen whether the mid-tier technology company will adopt a poison pill strategy, or find a white knight, to thwart the L&T takeover attempt.

The L&T chief executive said the deal was triggered after Mindtree’s largest shareholder, V.G. Siddhartha, approached them three months ago with an offer to sell his shares. Subrahmanyan claimed that L&T saw the Mindtree deal as an opportunity to deploy a substantial part of the Rs 15,000-crore cash mountain it currently sits on.

The acquisition of the 20.3 per cent stake held by Siddhartha and two other entities will cost Rs 3,269 crore at Rs 980 per share.

L&T has simultaneously announced plans to stump up Rs 5,030 crore to back an open offer to buy up to 31 per cent – a little over 5 crore shares – from existing shareholders.

It has also asked its brokers to scoop up another 15 per cent through open market purchases, which will cost another Rs 24,34 crore.