Anatomy Of A Takeover

There is no room for hostilities in the Mindtree takeover saga. Acquirer L&T too must do everything to make the deal a win win for all stakeholders

- Manika Gupta

WHEN LARSEN & TOUBRO (L&T) ANNOUNCED the deal to buy 20.23 percent stake amounting to Rs 3,269 crore in Mindtree from long-term investor V.G. Siddhartha of Coffee Cafe Day on March 19, it triggered a rage amongst the promoters. Subroto Bagchi, Co-founder and former COO of Mindtree Consulting pressed the panic button and termed the stake buy as a hostile takeover bid by L&T. He tweeted and called L&T a bunch of marauders arriving at the gates of Mindtree’s Eden with “bulldozers and saw chains” to mow it all down “so that in its place, they can build a shopping mall”. L&T Chairman A.M. Naik immediately got back saying that he was being painted as a villain but, in fact, he was a hero salvaging the minority shareholders. He said: “Khalnayak nahi nayak hoon main (Not a villain, am a hero instead)”. However, he made no bones about the fact that there was an acquisition bid.

He also disclosed the other contours of the takeover. That through its software services subsidiary L&T Infotech the company will make an open offer to Mindtree shareholders for another 31 percent stake and would make open market purchases of 15 percent.

Mindtree’s promoters Subroto Bagchi, K Natarajan, Ro s t ow Ravanan, and Parthasarathy N.S. decided to take a last-ditch stand against the hostile takeover by L&T. In India, even though there have been instances of hostile takeover attempts, only two have succeeded in changing ownership. And if L&T’s takeover of Mindtree happens, it would be the first in the IT services industry space.

Rationale For Takeover