L&T now owns 60% of Mindtree; founders offloading shares

Engineering conglomerate Larsen & Toubro (L&T) has completed the acquisition of 31% shares of Mindtree Technologies via its open offer that started on 17 June and ends tomorrow, bringing the total controlling stake to 60% in the mid-tier information technology (IT) services firm, according to a stock-exchange filing.

The filing with the National Stock Exchange (NSE) showed that the open offer was subscribed over 1.06 times. While the open offer had an issue size of 51.3 million shares at Rs 980 per piece, a total of 54.5 million shares were tendered. 

Mindtree's founders, who own a little more than 13% stake in the firm, had opposed L&T's bid.

According to The Economic Times, founders Krishnakumar Natarajan, Rostow Ravanan, Subroto Bagchi and NS Parthasarathy are now offloading their shares.

Ravanan is expected to continue as chief executive till L&T finds a replacement.  

The newspaper had also reported that Arohi Asset Management and Nalanda Capital had sold their stakes in the IT services firm.

The open offer, which was aimed at getting 66% control of Mindtree, was scheduled to start in the first half of May but was delayed as the capital markets regulator Securities and Exchange Board of India (SEBI) had asked for a few clarifications from L&T. On 31 May, SEBI approved the engineering major's open offer to buy Mindtree shares.

In April, L&T had completed the purchase of almost 20% stake in the Bengaluru-based IT services firm from its largest shareholder and coffee baron VG Siddhartha and two of his entities at Rs 980 apiece for more than Rs 3,200 crore.

The Mumbai-based company has also been steadily buying Mindtree shares from the open market; its total stake stood at 28.88% by the end of May. 

L&T had announced in March its intention to buy a 31% stake in Mindtree through an open offer after buying out a few large shareholders. L&T had then said that it was looking to pick up another 15% from the open market as part of its plan is to hike its overall stake in the firm to 66%.

The deal is one of the most high-profile hostile takeover bids in Indian corporate history. 

Last week, three L&T executives, including CEO and managing director SN Subrahmanyan, were appointed to the Mindtree board and Bagchi, the firm’s co-founder, who retired by rotation the same day, had not offered himself for re-appointment. 

The Competition Commission of India had approved L&T's proposal to take over Mindtree in April.