BENGALURU: Mindtree’s founders Krishnakumar Natarajan, Subroto Bagchi, Parthasarathy N S and Rostow Ravanan on Tuesday sent out a stinging message to the L&T brass that they would not quietly give in to the latter’s hostile bid for their company.
They described it as an unexplainable transaction by a company that has a very different culture, one that would disrupt Mindtree’s relationship with customers and competitiveness in the market.
“We do not see any strategic advantage in the transaction and strongly believe that the transaction will be value-destructive for all shareholders. Our success depends on building and nurturing relationships with our clients and partners. This unexplainable transaction will bring disruption to those relationships and impair Mindtree’s ability to differentiate itself in the market and continue to deliver client value and great shareholder return,” the founders said at a press conference here on Tuesday.
They said IT services is a people business, and if one side in a merger is averse to it, it could only have a bad ending. “Look at companies that went through an acquisition and look at the market cap of the acquirer and acquiree before the acquisition and six months later. Even in an agreed takeover, I would think that in 100% of the cases, the post-integration market cap is lesser than the preintegration market cap of the two companies. Forget about this case which is a hostile acquisition!” Ravanan said.
He disputed L&T’s suggestion that the larger scale the merged entity would have would help. Natarajan noted that the company’s 52-week high share price was Rs 1,183, while the L&T deal has been done at Rs 980. “That itself reflects the value lost,” he said.
Asked what options they had to counter the L&T bid, Ravanan said the option is to ensure their message gets heard. “We request all of you to carry our side of the story as much as the other side’s. We want to reach out to the larger world. Convince them on the logic that we have and hopefully they will not support this acquisition,” he said.
Asked if the founders would continue to lead Mindtree if L&T chairman A M Naik kept the company independent and allowed them management control, Natarajan replied, “Let Mr A M Naik come and meet us. It depends on what kind of commitment he makes, etc. The board and Mindtree will evaluate it at that stage and circumstance.”
Source: Economic Times