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Last Updated : Mar 19, 2019 01:02 PM IST | Source: Moneycontrol.com

L&T's Mindtree takeover: Key takeaways from management's address

Mindtree will remain a separate entity and will benefit from access to larger client base and wider product offerings, the L&T said in the filing

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L&T acquired 20.4 percent shares of Mindtree from local coffee baron VG Siddhartha and firms related to him for Rs 3,269 crore and also made an open offer for an additional 31 percent stake in the midcap IT services firm for Rs 5,030 crore in an all-cash deal.

In a statement, L&T said it had also placed an order with its broker for an on-market purchase of up to 15 percent of Mindtree's shares at 980 rupees apiece. This will take L&T's share to nearly 65 percent, valuing the deal at Rs 10,733 crore.

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.

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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

Here are highlights from the conference, where L&T MD & CEO S N Subrahmanyan said:

> Big portion of the company has been coming through EPC for many years

> Much of investments need to be done on manufacturing, have already been done

> EPC and projects businesses involve a lot of risk but form bulk of portfolio

> EPC business usually generates 6-7 percent of total net profit margin

> We have been giving filip to services business in last few years

> Service business net profit margin at 15-16 percent versus EPC business profit margin at 6-7 percent

> A few years ago, management of Mindtree had approached L&T

> VG Siddhartha approached L&T with a request of selling his stake

> VG Siddhartha approached L&T three months ago to pick his stake in Mindtree

> We looked at picking up stake in Mindtree after 3-4 rounds of meetings

> If we wouldn't have looked at Mindtree opportunity, someone else would have

> Mindtree makes enormous business sense

> L&T is an 80-year old company with a high standard of corporate governance

> Mindtree will continue to be run as an independent company

> There is room for negotiation with Mindtree promoters

> Logic behind Mindtree's stake is to expand services business, not integration with L&T Infotech

> Key objective remains to increase shareholder value

> We don't perceive this move as hostile; not planning on any integration

> Price of Rs 980 per share based on a premium to 6-month weighted average of Mindtree

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First Published on Mar 19, 2019 01:02 pm
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