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The Mindtree and L&T tussle over ownership is heating up and it is highly likely that the diversified conglomerate will pull the trigger later today.
It all started December last year when VG Siddhartha, Mindtree's largest stakeholder and founder of Café Coffee Day, said that he is looking to sell his 20.4 per cent stake in the IT services company.
One of the initial investors of Mindtree, Siddhartha stepped down as an independent director in March 2018. This development triggered speculations that Siddhartha might be looking to sell his stake to expand his coffee venture.
"We have several marquee financial investors who, over a long period of time, have helped build Mindtree into a highly valued institution. As with all financial investors, they have the prerogative to monetize their stake based on their individual priorities. As Mindtree, we are not privy to the plans of these investors and hence cannot offer any comments on it," said Krishnakumar Natarajan, Chairman, Mindtree.
First investor to evince interest was private equity firm KKR and Co, followed by L&T, Baring Asia and ChrysCapital.
AM Naik, Executive Chairman of the L&T Group, in January 2019 told media persons that the group is indeed looking at acquiring a stake in Mindtree but the Bengaluru-headquartered firm was one of the many options the firm was evaluating as an acquisition target.
L&T also reportedly held discussions with Mindtree to become the majority stakeholder. However, this was not successful as the latter rebuffed the offer owing to difference in cultural ethos between the two companies (L&T Infotech and Mindtree).
The discussion with Siddhartha, however, continued and according to reports, L&T is willing to offer Rs 981 per share for Siddhartha's stake.
In March, the L&T board reportedly met briefly to get the approval to buy Siddhartha’s stake and is likely to meet again today to finalise the deal. The announcement is expected anytime today.
In the meantime, Mindtree founders were looking at institutional investors to offer the counterbid to L&T’s offer including KKR, Baring Asia and ChrysCapital. However this has not been successful.
On March 15, Mindtree said in the BSE filing that the company board is meeting on March 20 to announce the buyback of shares in a bid to counter the hostile takeover. On Sunday night, Surbroto Bagchi, co-founder, resigned his position as the head of Odisha Skill Development Authority, to 'save the company' from hostile takeover of the technology firm.
According to reports, L&T may spend close to $1 billion to takeover Mindtree, which includes buying 20.4 per cent stake at Rs 981 per share and another 26 per cent open offer from public stakeholders.
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