A brief story of Mindtree Takeover.
- Larsen & Toubro (L&T) group take control of Mindtree after buying 60% share
- Mindtree founders and promoter were against Larsen & Toubro (L&T) takeover and called it a hostile takeover
I am sure that 15k readers from Indian IT Blog are already aware of the Larsen & Toubro (L&T) takeover drama of Mindtree.
Let’s look at some of the points:
Why there is so much noise on this takeover:
Usually, when a company wants to acquire another company, company promoters and investors reach a deal with a friendly agreement. However, in this case, Mindtree founders did not wish Larsen & Toubro (L&T) to take over.
To gain control on Mindtree, L&T group bought 60% shares through various channels.
As per below tweets, Mindtree founders and promoters were against this takeover.
How did Larsen & Toubro (L&T) takeover Mindtree:
Mindtree is a public listed company which means shareholders owns the company. Now typically investors/Private Equity firm who have major intakes in share will have control on company management.
In this case, L&T got 60 % shares and gained control of Mindtree.
- G. Siddhartha sold 20.4% stake to L&T
- Additional 31% stake through an open offer
- Extra 9% from the open market, L&T can buy up to 15% stack
Why V.G. Siddhartha sold 20.4% stake to L&T which triggered this hostile takeover:
Cafe Coffee Day founder V.G. Siddhartha was one of the earliest and largest investors of Mindtree however, due to financial debt, he decided to sell his stake to L&T, leaving Mindtree vulnerable to a hostile takeover.
If Mindtree was against this takeover, why they did not explore other options?
Mindtree founders explore various options; however, it did not work out well.
- Changes are expected in the board of directors and other management positions including CEO
- Potential cultural sock for ~20K Mindtree employees as the culture of both the organization is entirely different
- L&T might merge three Information Technology subsidies into one entity