New Delhi: Independent directors of the Bangalore-based IT firm Mindtree Ltd will meet on Tuesday ahead of the company’s board meeting to advise its board on whether to proceed with the share buyback proposal and further consider Larsen and Toubro Ltd’s (L&T’s) offer to buy shares from the company’s public shareholders.
The stage was set after L&T, India’s largest engineering company, agreed to buy Café Coffee Day founder V.G. Siddhartha’s 20.32% stake for 3,269 crore on March 18, further announcing plans to buy a total of 67% in Mindtree for roughly Rs 10,700 crore. Now the founders of Mindtree, who together constitute 13.32% of ownership in the company, are trying to ward off this ‘hostile takeover bid’ by buying back shares from public shareholders.
Apurva Purohit, Mindtree’s lead independent director and chairperson of company’s nomination and remuneration committee said the independent directors’ committee will follow due process and would hold talks based on independent advice and recommendations, The Mint reported.
Tuesday’s meeting comes after the Mindtree’s board meeting on March 18 failed to reach a conducive conclusion, on account of which, no decision over the buyback proposal was taken. The directors are also expected to discuss the company’s quarterly financial results in the meeting.
Mindtree shares closed at ₹940.25 apiece on the BSE on Monday.
The hostile bid has shocked the IT industry, where deals are fought hard, but competitors remain friendly. Until Mindtree co-founder Subroto Bagchi tweeted that there was a threat of an imminent hostile takeover, few believed such a thing could happen.
Though few, there are tools through which Mindtree can prevent an acquisition. “Some of the options make the takeover expensive for the acquirer. In some cases, the most attractive assets of the target company are sold off so that the acquiring company may lose interest and back out from the hostile takeover,” said DK Srivastava, chief economic adviser, Crisil.