Indian conglomerate Larsen & Toubro (L&T) on March 18 said it would buy 20.32 percent stake at Rs 980 per share in Mindtree for Rs 3,269 crore. It also made an open offer for an additional 31 percent stake in the IT services firm for Rs 5,030 crore in an all-cash deal.
L&T, which is acquiring the 20.4 percent shares from local coffee baron VG Siddhartha and firms related to him, said in a statement it had also placed an order with its broker for an on-market purchase of up to 15 percent of Mindtree's shares at Rs 980 apiece. This will take L&T's share to nearly 65 percent, valuing the deal at Rs 10,733 crore.
L&T, whose board met during the day to consider the acquisition of Mindtree, offered to buy 5.13 crore shares from shareholders.
Mindtree will remain a separate entity and will benefit from access to larger client base and wider product offerings, the company said in the filing.
The company has entered into a definitive share purchase agreement (SPA) with VG Siddhartha and related entities, Coffee Day Trading and Coffee Day Enterprises, to acquire 20.32 percent stake, L&T said in a release
The transaction is subject to regulatory approvals. L&T has sufficient financial flexibility to fund the entire transaction through its existing financial resources, the statement added.
This acquisition is in line with L&T's stated strategy of focusing on services and asset-light businesses to drive profitable future growth. This further adds to L&T's attractive IT services platform with a focus on new-age digital and cloud solutions, making it highly complementary to L&T's current technology services portfolio. Mindtree's offerings to its customers include application development and maintenance, infrastructure management services, independent testing, package implementation, consulting and IP products related solutions.
While Mindtree would remain an independent listed entity, the statement said that L&T would extend support to Mindtree in its business going forward. The Mindtree will benefit from access to larger client base and wider product offerings under a common parentage giving higher returns to shareholders of Mindtree, the statement added.
SN Subrahmanyan, CEO and Managing Director, said in the statement that, "This acquisition is part of our strategy to deliver industry leading IT services to our clients worldwide. It will help propel LEtT's technology portfolio into top tier of Indian IT companies. Mindtree has a well-established management team which has earned the respect of the market in terms of its service offerings and business practices. This acquisition will allow L&T to further enhance shareholder value for both its own shareholders and Mindtree shareholders in the medium to long term."(With inputs from Reuters)