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After pyaar, Larsen & Toubro advices Mindtree to dial down the hostility

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MUMBAI: Cut down the hostility and let Larsen & Toubro have a seat on the board, then we can talk about how Mindtree can be run independently – that’s the advice R Shankar Raman, chief financial officer of the engineering conglomerate, has for the founders
of Mindtree.

Mindtree’s founders have attacked L&T for launching a ‘hostile takeover’ after it bought a 20.3% stake from early investor VG Siddhartha, paving the way for an open offer and potential acquisition of a controlling stake in the company. While L&T has said Mindtree will continue to be an independent company under the conglomerate, it has been attacked by the founders and employees, who are referred to as “Minds” in the IT services company, for its move.

L&T offered pyaar (love) last week. Now, it’s some advice.

“If there is going to be a lot of hostility towards the idea, then to talk about the operating format is not conducive.

First, they have to accept that L&T is moving around in the room and it requires a seat. Once the seat is provided, we can work out the details of how they can operate independently,” Shankar Raman told ET.

Since the deal was announced last week, the managements of both companies have not met officially. The L&T leadership has said it had informal talks with the Mindtree founders, which the latter have denied.

“The transaction has to be consummated. The objective should be to minimise the period of uncertainty. When we hear from them that they are less angry and want to understand what the plan is, we will be able to decide on the timeline of meetings to discuss this. We are very clear and not changing what we say,” he said.

The $18-billion engineering conglomerate houses four listed companies with independent boards – L&T, L&T Finance Holdings, L&T Infotech and L&T Technology Services.

The CFO said the Mindtree management’s concerns about the company’s independence were unfounded and stem from their unfamiliarity with running multiple businesses independently, which L&T has done for years.

“Our processes are board-managed. The need to interfere comes only if there is a difference between plan and actual execution. None of our companies have ever complained that their independence has been stymied. We already have a track record of running such companies and can have one more,” the CFO said.

There has been speculation that the Mindtree founders are unhappy with Rs 980 a share offered by L&T, which is significantly lower than the its 52-week high of Rs 1,183, and may ask for Rs 200 apiece more.

Source: Economic Times