L&T, Mindtree come in open to counter each other over hostile deal

Infrastructure major Larsen and Toubro Tuesday moved in to allay concerns over its Rs 10,800-crore bid to take over IT services firm MindTree, whose management strongly objected to the proposal calling it "value destructive" and "grave threat" to the company's future.

L&T, which has its own IT business, said it was not making any hostile takeover bid and that the deal was essentially triggered by the Mindtree's largest shareholder -- V G Siddhartha -- offering to sell his shares.

This is seen as the first hostile takeover bid in the Indian IT industry.

Addressing a press conference in Mumbai, L&T Managing Director and CEO S N Subrahmanyan said Siddhartha would have anyways sold the stake and instead of it going to private equity players he wanted a corporate house to step in.

"The senior management at Mindtree are good friends with us and are people of repute and we see a lot of positivity in going ahead with the deal. Mindtree will be run as an independent company, L&T will provide board oversight. We hope better sense and rationality will prevail," he said.

With "dil and pyaar" (heart and love), the company will be able to win over everybody, Subrahmanyan said, whereas Mindtree Executive Chairman Krishnakumar Natarajan told a news conference in Bengaluru, "This (bid) is a MeToo moment in corporate world".

He was referring to 'MeToo movement', a series of complaints by victims of molestation.

Subrahmanyan made it clear that L&T, which is looking at the Mindtree deal as an investment to deploy its cash of over Rs 15,000 crore, will want at least 26 per cent stake in the target company.

Mindtree management countered it with objections to the bid, calling it an "unprecedented" hostile takeover attempt which will damage value for shareholders of both the companies as customers and employees may leave the firm in case L&T acquires it.

"The attempted hostile takeover bid of Mindtree by Larsen & Toubro is a grave threat to the unique organization we have collectively built over 20 years," according to a statement from the executives, which include CEO Rostow Ravanan and Executive Chairman Krishnakumar Natarajan. "We don't see any strategic advantage in the transaction and strongly believe that the transaction will be value destructive for all shareholders."