Larsen and Toubro (L&T) has acquired control of IT services firm Mindtree with 60.06 percent stake and will be categorised as promoter.
The development is significant as the Mindtree founders had initially resisted the hostile takeover bid from the engineering giant with IT presence.
“We wish to inform that Larsen & Toubro Ltd has acquired equity shares to an extent of 60.06 per cent of the total shareholding of the company and has acquired control and is categorised as promoter pursuant to SEBI Regulations, 2018,” Mindtree said in a BSE filing on Wednesday.
Construction major L&T held 9.87 crore equity shares in Mindtree as on July 2 following its recently-concluded open offer.
L&T bought 20.32 percent shares in Mindtree from VG Siddhartha and his coffee enterprise for over Rs 3,000 crore in March, and then enhanced its holding with more shares from the open market and a subsequent open offer for an additional 31 percent stake.
With L&T now holding more than 60 percent stake in Mindtree, top executives of the IT services firm, including CEO Rostow Ravanan, are unlikely to continue with the firm after its mid-July AGM.
L&T Chairman AM Naik said he would like the current Mindtree management to continue for as long as it wants.
Subroto Bagchi, one of the co-founders of Mindtree, has decided not to seek re-election to the board. He has returned to Odisha to take up a position with the State government, indicating the mood among the promoters.
“If there is continued animosity between the Mindtree promoters and the L&T executives, Board decisions may be split, and management bandwidth could be severely constrained,” proxy advisory firm InGovern Research said in a note to investors.
The note said the induction of three L&T executives on the board of Mindtree as non-executive directors leads to more uncertainty for the company. Since the current promoters consider the L&T acquisition as a hostile acquisition and have three board seats, there is the likelihood of a stand-off within the board.