Mindtree announces special dividend amidst L&T takeover bid

In its latest BSE filing, Mindtree declared that the company was contemplating shelling out an interim dividend or special dividend for the quarter ended March 31, 2019.

This announcement was cause for concern as it came at a time when L&T has made an open offer to acquire Mindtree.

L&T acquired a majority stake of 20.32 per cent in Mindtree in March 2019. The stake belonged to VG Siddhartha and Coffee Day Enterprises. Eventually, L&T raised its offer to acquire an additional 46 per cent stake through an open offer for 31 per cent stake and 15 per cent on-market purchase.

This open offer commences on May 14, 2019. Mindtree has appointed the Committee of Independent Directors to extend their recommendations to shareholders by May 10, to help them decide whether or not to sell their stake.

On April 17, 2019, Mindtree will announce its annual results as well as results for the fourth quarter ended December 2018. It will also debate on the matter of payment of interim/special dividend. Experts believe that a company cannot declare special/interim dividend unless it is done so in an ordinary course of action. However, declaring such a dividend in light of L&T’s open offer does not qualify as an ordinary course of action. However, JN Gupta, the former Executive Director of the Securities and Exchanges Board of India, and Co-founder & Managing Director of Stakeholders Empowerment Services (SES), said the company is well within its rights to declare an interim and special dividend.

On Tuesday, the shares of Mindtree opened at Rs. 982.00 and hit a high and low of Rs. 987.50 and Rs. 978.05, respectively. At 2:35 pm, the stock was trading at Rs. 980.15 per share, up 0.21 per cent.