Mindtree on Tuesday formed a committee of independent directors (IDC) to look into “unsolicited open offer” by Larsen & Toubro to give its recommendations and decided not to go ahead with its share buyback plan.
“All the independent directors will be members of the IDC, and the IDC has elected Apurva Purohit, Lead Independent Director, as the Chairperson of the IDC and spokesperson. The IDC will consider and evaluate all aspects of the unsolicited offer, taking into account all relevant facts, circumstances, data related to the company and industry and the interests of all stakeholders involved,” Mindtree said in a stock exchange filing.
“After detailed deliberation and discussion, the board in its meeting, decided to immediately constitute the committee in the interest of all stakeholders to provide their reasoned recommendation in respect of the unsolicited offer by L&T for the consideration of the shareholders. This committee will discharge the legal obligations placed on the independent directors under the prevailing regulations with respect to providing reasoned recommendations on the unsolicited offer by L&T,” the company said. This committee will be supported by independent legal and financial advisors to help it with its deliberations, it said.
Significantly, indicating the dilution of tough stance taken by Mindtree promoters against the L&T takeover offer, the company has decided not to go ahead with the buyback plan. A share buyback will bring down the public stake in the company while promoters stake will go up if they don’t participate in the offer.
On March 18, L&T said that it has entered into an agreement with VG Siddhartha and his related entities — Coffee Day Trading Limited and Coffee Day Enterprises Limited — to acquire 20.32 per cent stake in the technology firm at Rs 980 per share aggregating to approximately Rs 3,269 crore. The takeover, involving market purchases and open offer, is expected to cost L&T over Rs 10,000 crore. L&T is aiming for 66.32 per cent stake in Mindtree.
According to the promoters, a hostile takeover by L&T, unprecedented in the IT industry, “could undo all of the progress we’ve made and immensely set our organisation back.” “We don’t see any strategic advantage in the transaction and strongly believe that the transaction will be value destructive for all shareholders,” they said. The promoters of Mindtree are: Krishnakumar Natarajan (executive chairman), Subroto Bagchi (co-founder), Rostow Ravanan (CEO) and Parthasarathy NS (executive vice chairman and COO).