L&T’S Acquisition of Mindtree Limited: Is It Worth Contesting?

Abstract

On March 18, 2019, Larsen & Toubro (L&T) made an open offer to buy up to a 31% stake in Mindtree (MT), which was among the top 10 information technology (IT) companies in India. L&T had already purchased the 20.41% stake that V. G. Siddhartha (VGS), the largest individual investor in Mindtree, was looking to sell. Mindtree’s promoters felt that the acquisition by L&T would add no value for the shareholders of the company. They had considered the option of buying VGS’s stake and had discussions with suitors who had shown interest in the same. The latter included PE firms such as Kohlberg Kravis Roberts & Co. (KKR) and Baring PE Asia. However, in the end, L&T ended up buying the stake given the price it was willing to offer and the good relationship that its CEO, S. N. Subrahmanyan had with VGS. This led to the first hostile takeover in the Indian IT Industry. The struggle between L&T and Mindtree’s founders left investors in a lurch. While Mindtree’s promoters released a statement stating that L&T’s offer was value-destructive for shareholders, they could not provide any better alternatives. As the founders and L&T continued to lock horns, the investor needed to decide whether L&T had offered a fair deal.