Saturday , March 28 2020
Home / IT Industry News / Mindtree becomes the first forcefully acquired Indian IT company
Mindtree takeover
Mindtree takeover

Mindtree becomes the first forcefully acquired Indian IT company

A brief story of Mindtree Takeover.

 

 Highlights:

  • 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.

 

What Next:

 

  • 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

 

Check Also

Epic Guru Movie Software Developer version

Epic Software Developer version- Guru Movie