The stake of engineering behemoth L&T in Mindtree has risen to 26.48 percent after an open market purchase on May 16.
The company purchased 886,438 shares via open market on May 16 at Rs 979.81 per share, crossing the necessary 25 percent level to trigger the open offer on May 9.
However, pending approval of the Securities and Exchange Board of India (SEBI), L&T had to postpone the open offer scheduled on May 14. According to sources, the nod from SEBI is expected within a fortnight.
Once the approval is in place, L&T’s open offer for Mindtree shares can start.
The market regulator SEBI had asked L&T for clarifications and received a response only on May 10. This delayed the approval process making the committee of independent directors set up by Mindtree incapable of giving recommendations to shareholders on whether to opt for the open offer or not.
According to analysts, independent directors can give recommendations only after the letter of offer has been dispatched by L&T. In addition, the recommendations should be made two days prior to the start of the open offer. However, it could not happen without SEBI approval in place.
In India’s first-ever hostile takeover bid, L&T signed a definitive agreement to buy 20.32 percent from VG Siddhartha and his coffee enterprise for over Rs 3,000 crore on March 18, 2019. The deal was formalised last month.
The company said it will buy an additional 46 percent through the open market purchase of 15 percent shares and 31 percent through an open offer. This puts the total value of the acquisition at Rs 10,700 crore at Rs 980 per share.
L&T on May 9 upped its stake to 25.93 percent in Mindtree. A stake of over 25 percent stake in Mindtree means that L&T can call for board meetings and seek a seat on the Mindtree board. Sources said L&T had raised concerns about Mindtree’s governance and board practices and these matters would be the focus for L&T management.
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