BENGALURU: Mindtree, which is facing a hostile takeover from Larsen & Toubro (L&T), said it would reconvene its board meeting on March 26, the day when the engineering conglomerate is set to share details of its open offer with shareholders of the mid-tier IT services company. Mindtree board met on Wednesday but deferred a decision on a share buyback, citing commercial and legal issues. ET reported on Thursday that some directors had recommended to the Mindtree founders to consider L&T’s offer and negotiate for a higher price for its shares.
Mindtree founders were considering the share buyback to thwart any hostile takeover of the company. But since L&T has already announced the open offer, Securities and Exchange Board of India (Sebi) regulations prevent Mindtree from buying back its shares now. On Monday, L&T bought a 20.3% stake in Mindtree from long-term investor VG Siddhartha for Rs 3,269 crore. It is expected to spend another Rs 7,464 crore to increase its stake to 66.6% through a combination of an open offer and buying shares in the open market. “If they are going to consider the buyback proposal, that is going to be a fait accompli. It will be a wasted exercise. Shareholders will not approve it. Other things that may be considered is whether the board of directors need to reach out to L&T,” said Shriram Subramanian, managing director of InGovern, a corporate governance advisory firm.
“Emotional appeal and large animosity displayed are not going to help their case when L&T said the company can be run independently.” Mindtree CEO Rostow Ravanan on Wednesday told ET that the board had deferred the decision on the buyback and had sought details on legal process and commercial details. Shareholder advisory firm SES said earlier this week that in the absence of a public announcement, independent director of Mindtree, or SES, wouldn’t have the complete information about L&T’s future plans and actions. “Without such knowledge, any suggestion to shareholders would be like shooting arrows in the dark,” it said a note. “All that the company can do, is wait for L&T to come out with its plan so that shareholders are able to take a more informed decision or independent directors are able to provide a comprehensive view on the offer,” it said.
Source: Economic Times