L&T acquires another 2.3% stake in software services firm Mindtree

Engineering and construction giant Larsen & Toubro (L&T) has picked up another 2.3% stake in software services firm Mindtree, exchange data showed. This takes the overall L&T stake in the Bengaluru-based company to 23.92%.

The seller was Enam Investment, a person privy to the development told TechCircle. At Rs 979.96 for each share, L&T paid Rs 368 crore for the stake. Once L&T reaches 26% stake, it is expected to call a shareholder meeting to request promoter status for the group.

Mindtree's board is expected to give its recommendations on L&T's hostile bid for the mid-tier IT firm on Friday.

Earlier this week, the Mumbai-based conglomerate had bought shares worth Rs 113 crore of Mindtree from the secondary market.

Amid rumours in the market that some large investors might not sell shares at Rs 980 apiece in the open offer, which will begin on 14 May and close on 27 May, the engineering firm has decided not to raise the offer price of Rs 980 per share, a person in the know told TechCircle.

According to the open offer documents filed with the Securities and Exchange Board of India (SEBI), L&T has the option to revise this price till 13 May.

"The management thought that the offer price already built in sufficient premium over the fair value of the stock," the person said.

It is reliably learnt that certain investors of Mindtree, including Pulak Prasad-run Nalanda Capital, which holds 10.61% stake, and the promoters, had been asking institutional shareholders not to tender their shares in the open offer.

The person said that the L&T management has decided not to give in to any such tactics aimed at bumping up the offer price, as the stock movement has remained largely stable at around Rs 980 since the bid was announced. 

Last week, L&T bought almost 33 million shares from Indian coffee baron VG Siddhartha and two of his entities at Rs 980 apiece for more than Rs 3,200 crore for a 20% stake.

In one of the most high-profile hostile takeover bids in Indian corporate history, L&T had announced in March its intention to buy 31% stake in Mindtree through an open offer. L&T has plans to hike its overall stake in Mindtree to 66%.

Mindtree's founder-promoters, who own a little more than 13% stake in the firm, had opposed L&T's bid and have been working with large investment firms to raise their stake in the company.

Mindtree had crossed $1 billion in revenue in the last financial year. It reported a 9% growth in net profit for the fourth quarter to Rs 198 crore. Net revenue for the quarter through March jumped 25.6% to Rs 1,839.4 crore.  

Last month, the Competition Commission of India (CCI) had approved L&T's proposal to take over the Bengaluru-headquartered IT services firm.

Mumbai-based L&T has two entities that cater to technology customers -- L&T Technology Services and L&T Infotech. The eight-decade-old group had over $17 billion in revenue and more than a billion dollars in net profit in the last financial year.