InvestorQ : What can shareholders of Mindtree expect from L&T tussle?
Tanu Shukla made post

What can shareholders of Mindtree expect from L&T tussle?

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seema Upadhyaya answered.
1 year ago

VG Siddhartha and his group companies hold 20.4% in Mindtree and now looking to monetise his share. The possible buyer to his share is the rival company L&T Infotech (LTI). Now if this deal happens then there will be a major change in the control as VG Siddhartha is one of the large non-promoter shareholders. Media also reported that Mindtree chairman and cofounder Krishnakumar Natarajan has warned against a hostile takeover bid in a letter to the L&T board on Saturday.
However, the company’s management is not in favour of this takeover and so this would be a hostile takeover. The founding promoters Natarajan, Subroto Bagchi, NS Parthasarathy and Rostow Ravanan has collective control to 13.32% of the company and to avoid this takeover they are in talks with Baring PE Asia, Chrys Capital and KKR, to carry-over deal. This would be possible if they find friendly PE investors that can acquire Siddartha’s shares and thus stop the change in control.
The fight for Siddharth’s shares between the company and L&T is yet to come, but this is win-win situation for minority shareholders. It is rumored that L&T had offered a price approximately to around Rs 980 per share. This price is 4% premium to Friday’s closing price of Rs 946. This price is 4% premium to Friday’s closing price of Rs 946. So Mindtree shareholders can expect a upward movement in the share price.

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1 year ago

The tug of war to buy Siddharth’s shares finally came to an end as L&T Infotech bought Siddharth’s 20.32% stake in Mindtree. The engineering giant- L&T has paid Rs 980 per share thus paying Rs 3,269 crore to Siddharth. CEO of L&T, SN Subrahmanyan said “This acquisition is part of our strategy to deliver industry leading IT services to our clients worldwide.”
After making headlines for a few days, L&T was successful in buying 20.32% stake, and now expecting to spend approximately Rs 7,464 crore to raise further to 66.32% in the MindTree. A person familiar with the deal said that the as per founder’s plan few investors were ready to pay Rs 900 but Siddharth wanted Rs.1000 per share and so settled for L&T offer.
On Monday 18th March 2019, the share of Mindtree stock closed at high 1.74% up at Rs 962.5 price on the BSE. This up-movement in share was before the deal was announced. However, the L&T stock saw a downward movement of 1.32% at Rs 1,378.85, while share prices of (L&T Infotech) LTI closed 3.33% down at Rs 1573.30 and L&T Technology ended 0.76% down at Rs. 1,490.60. The price dip of L&T and its group of companies shares was quite contradicting as the benchmark BSE Sensex was up by 0.19% at 38,095.07 points.