Engineering conglomerate Larsen and Toubro’s (L&T) intentions of acquiring a majority stake in Bengaluru-based information technology (IT) company Mindtree may come across as hostile to the promoters of the mid-tier IT firm, but the way L&T’s CEO and MD, S.N. Subrahmanyan sees it, his company is approaching this with pyaar (love) and from their dil (heart).

On Monday, March 18, Mumbai-based infrastructure major announced its deal to acquire a 20.31% stake in Mindtree from one of principal shareholders, V.G. Siddhartha, for ₹3,269 crore. L&T, which seeks majority control of the IT firm with a stake of around 66%, also said that it will make an open offer for an additional 31% of Mindtree’s share capital. It has also placed an order with its broker to acquire up to 15% of Mindtree’s shares from the market. The purchase of Siddhartha’s shares, the open offer, and additional market purchase are all envisaged at a maximum price of ₹980 per share.

The pushback from Mindtree’s founder promoters was almost immediate. Terming L&T’s move as a hostile takeover attempt, they said that there was no strategic advantage that would accrue to Mindtree and its shareholders from the proposed transaction and it would be “value destructive.”

One of the company’s founders, Subroto Bagchi, joined the Odisha Skill Development Authority as its head announced his resignation from the government body and his intention to return to Bengaluru to help ward off the unsolicited takeover. “An imminent threat of hostile takeover of Mindtree has made me to resign from the government to be able to go, save the company,” Bagchi tweeted. “I must protect the tree from people who have arrived with bulldozers & saw chains to cut it down so that in its place, they can build a shopping mall.”

Given the rhetoric in the air, it was hardly surprising that L&T senior management, represented by Subrahmanyan and whole-time director and chief financial officer, R. Shankar Raman, met the media in Mumbai on Tuesday to make an impassioned case for the business rationale of Mindtree aligning itself with L&T.

Subroto Bagchi

L&T’s returns from Mindtree investment can double in five years