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L&T announces Rs 5,030-cr open offer for Mindtree at Rs 980/share

June 07, 2019 22:10 IST

The open offer is slated to commence on June 17 and close on June 28

After nearly a month's delay, infrastructure major Larsen & Toubro Friday announced a Rs 5,030-crore open offer to acquire an additional 31 per cent stake in mid-tier IT company Mindtree at a price of Rs 980 per share.

L&T has so far acquired 28.90 per cent stake in Mindtree and the open offer, if fully subscribed, will take its shareholding in the IT company to about 60 per cent.

 

In all, the infrastructure major is eyeing about 66 per cent stake in Mindtree for over Rs 10,700 crore -- a mix of recent stake acquisition from Cafe Coffee Day owner, the ongoing open market transactions and the ensuing open offer.

The open offer is slated to commence on June 17 and close on June 28, according to the letter of offer by L&T.

In March, L&T had mounted a hostile takeover bid on Mindtree after entering into a deal to buy Cafe Coffee Day owner V G Siddhartha's 20.32 per cent stake in the Bengaluru-based firm and also placed an order with brokers to pick up another 15 per cent of the company shares from the open market.

"Larsen and Toubro makes a cash offer of Rs 980 per fully paid up equity share of the face value of Rs 10 each, to acquire up to 5,13,25,371 equity shares representing 31 per cent of the voting share capital ... to the shareholders of Mindtree Ltd," said the letter of offer communicated to the BSE by Mindtree Ltd.

At Rs 980 apiece for 5,13,25,371 shares (31 per cent stake), L&T will have to shell out about Rs 5,029.8 crore for the planned open offer.

The open offer price is higher than Mindtree's closing price of Rs 969 at BSE on Friday.

L&T's open offer was earlier scheduled to begin on May 14 but got delayed as the engineering major was awaiting nod from the Securities and Exchange Board of India.

According to the schedule drawn up, the deadline for dispatch of the Letter of Offer to the shareholders of Mindtree is June 8, while the last date by which a committee of independent directors of Mindtree is required to give its recommendation to shareholders on the offer, is June 13.

The deadline for upward revision of the offer price or the offer size is June 14.

The acquisition is expected to be "value accreting" for both the L&T's and Mindtree's shareholders in the medium to long term, the filing said.

"The target company is expected to operate as an independent company within the Larsen & Toubro Group in the short to medium term.

“The board of directors of the target company may recommend consolidation of the target company with other entities in the Larsen & Toubro Group, which may be given effect to after obtaining the necessary approvals under applicable law," it added.

L&T said the open offer is being made after it acquired 3.33 crore shares, aggregating up to 20.15 per cent of Mindtree share capital from V G Siddhartha, Coffee Day Trading Ltd and Coffee Day Enterprises Ltd for Rs 980 apiece, totalling Rs 3,269 crore.

Also, another 2.48 crore shares aggregating up to 15 per cent shareholding is to be acquired by way of a purchase order placed with stock broker Axis Capital Ltd on March 18 for Rs 2,434 crore.

L&T said Mindtree acquisition is in line with its strategy to grow the revenue and profit of its asset-light services business portfolio.

Mindtree's net profit grew 32.2 per cent to Rs 754.1 crore in 2018-19 while revenue was up 28.5 per cent to Rs 7,021.5 crore from the previous fiscal.

The company has been under the media and investor spotlight for months now - first on account of the takeover drama that unfolded earlier this year and more recently when Mindtree's board in mid-April proposed to pay a special dividend to shareholders, including promoters, that along with regular dividend and tax components would strip the mid-sized IT firm of about Rs 530 crore.

Photograph: Shailesh Andrade/Reuters

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