L&T pins hope on SEBI approval to buy 31% stake in Mindtree via open offer

Engineering and construction behemoth Larsen & Toubro's open offer to buy 31 per cent stake in Bengaluru-based IT company Mindtree hang in the balance as market regulator SEBI is yet to give approval for the same.

Capital market watchdog Securities and Exchanges Board of India (SEBI) is expected to give a decision on the L&T open offer this week, which was set to start on May 14. According to corporate governance experts, L&T cannot go ahead with an open offer plan without SEBI's nod on or before May 13, in view of the restrictions placed by the market regulator.

L&T has touched the trigger point to start an open offer on May 10 after it increased its stake in mid-sized software firm Mindtree to 25.93 per cent. However, the company missed a deadline to issue its letter of offer to Mindtree shareholders, which is likely to delay the open offer plan.

L&T plans to raise its stake in Mindtree to 66.32 per cent by spending as much as Rs 10,800 crore, through an open offer for 31 per cent and an open market acquisition of 15 per cent.

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The Mumbai-based conglomerate has made a public announcement for the acquisition of 31 per cent shares of Mindtree from the market, with Axis Capital and Citi Global managing the open offer. The company has priced the offer at Rs 980 per share, which is scheduled to start on May 14 and close on May 27.

Meanwhile, Mindtree's independent directors committee (IDC) that was set up to provide their reasoned recommendation on the unsolicited offer by L&T on May 10, is yet to come up with its suggestions. The committee headed by the lead independent director Apurva Purohit will provide their reasoned recommendation in respect of the unsolicited offer by L&T for the consideration of the shareholders.

In a hostile takeover bid, the infrastructure giant acquired a 20.32 per cent stake of V G Siddhartha, the top shareholder in Mindtree at Rs 980 per share on March 18.  After completing stake buying from Cafe Coffee Day founder Siddhartha, L&T bought 2.29 per cent stake in Mindtree for Rs 368.4 crore on May 8. One day later, it bought an additional 1 per cent of Mindtree shares, along with another 2.01 per cent shares through bulk deal, taking its total holding in the company to 25.93 per cent, which will ensure it a board seat in the firm and the power to propose or block special resolutions.

Edited by Chitranjan Kumar

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