What should investors expect from Mindtree open offer?
After a round of war of words between the founders of Mindtree and L&T management, the market is now looking forward to the response for the Mindtree's open offer initiated by L&T. So what should investors expect?
Much has been talked about the conglomerate making the first hostile takeover bid in the history of Indian stock markets and Mindtree promoter's emotional connect with their successful enterprise. But what the deal actually means is L&T will use it cash reserve to buy a mid-cap company that will benefits its listed subsidiary and software company L&T Infotech.
L&T's open offer comes to effect on June 17 and will remain open until June 28. The company aims to acquire up to 5.13 crore shares of Mindtree at Rs. 980 per share, which represents 31 per cent of the voting share capital.
Towards the end of May, L&T had acquired 26,974 equity shares of Rs. 10 each of Mindtree. The shareholding of L&T in Mindtree is at 28.88 per cent. It is aiming to raise its stake to 66 per cent. L&T kicked-off the Mindtree takeover process by purchasing close to 20 per cent stake from VG Siddhartha and Cafe Coffee Day through a block deal for approximately Rs. 3,210 crore
The challenges for L&T would be of integration of Mindtree, wherein initially the promoters were reluctant to be a part of the conglomerate and tried to take the buyback route to increase stake, but later appointed a panel of independent directors to evaluate the hostile offer.
Institutional shareholders and other stakeholders will play a major role in this takeover bid. As per L&T, the acquisition will be value-accretive to shareholders. For the IT industry, the deal is in-line with the need for consolidation in the software sector.
Meanwhile, during lunch hours on Monday, the stock of Mindtree was quoting Rs. 975.75 per share, up by 0.70, while Larsen & Toubro was trading Rs. 1,530.00 per share, up by 1.11 per cent and Larsen & Toubro Infotech was at Rs. 1,778.40 per share, down by 1.19 per cent on BSE.