MUMBAI: Larsen & Toubro chairman AM Naik said his company was not seeking a hostile takeover of Mindtree and was open to talks with the IT services firm’s founders to allay their concerns.
“This is no hostile bid. The shareholder approached L&T first—how can that be hostile by us? We are open to further negotiations with Mindtree—our doors are always open,” he told ET. “L&T has done much more for its employees than Mindtree for theirs. We formed the L&T employees’ trust, which owns a sizeable stake in the company.
Our culture has been called the best by several studies. So it is ridiculous to state otherwise.”
Naik also responded to remarks by Mindtree cofounder Subroto Bagchi and others.
“Who is Bagchi to ask why L&T cannot build a Mindtree?” he said. “We have built huge businesses and in the same space too. And we will do what we can to grow our businesses further.”
Naik has so far remained in the background, allowing the L&T’s executive leadership to engage with stakeholders in Mindtree.
After signing a deal to buy longterm investor VG Siddhartha’s 20.3% stake, L&T plans to increase it to 66.3% through an open offer and by purchasing shares from the market.
The move has sparked stiff resistance by Mindtree’s founders and employees. The outburst took the leadership of L&T by surprise. The Mindtree promoters, including chairman Krishnakumar Natarajan, Bagchi, chief operating officer NS Parthasarathy and managing director Rostow Ravanan, hold a 13.32% stake in the company.
L&T’S NAIK THWARTED TWO HOSTILE TAKEOVER BIDS
Naik, the veteran boss of India’s largest construction and engineering company, is credited with having thwarted two hostile takeover attempts of L&T , once by Grasim and before that by the undivided Reliance Industries. He then established the L&T Employees’ Welfare Foundation as the holder of a significant stake in the company to ringfence it from further takeover bids. The trust owns about 19% of L&T.
ET was the first to report on L&T’s interest in buying Siddhartha’s stake on January 21.ET first reported the details of the deal on March 18.
Naik had previously refrained from weighing in on the acquisition plan. He told ET a day after the deal was announced that the transaction was being led by managing director and chief executive officer SN Subrahmanyan, who had been approached by Siddhartha. The L&T management has stated that Mindtree would be allowed to operate as an independent entity. The $18 billion engineering conglomerate has two listed technology companies—L&T Infotech and L&T Technology Services.
An L&T board member said Naik’s comments could go a long way to calm the fears of Mindtree’s founders, although that in no way diminished the efforts of Subrahmanyan and CFO R Shankar Raman in putting together the deal.
Source: Economic Times