All eyes on May 13 for SEBI approval of L&T open offer on Mindtree

Just when it was looking like the Mindtree – L&T takeover saga is coming to an end, a delay in the market watchdog’s approval for L&T’s open offer has created uncertainty.

The market regulator Securities and Exchanges Board of India (SEBI) is yet to give its nod to the L&T open offer that is set to commence of May 14. Without SEBI’s approval in place on or before May 13, the open offer cannot start.

This is despite the fact that the engineering major on May 9 picked up a 25.93 percent stake in Mindtree, which automatically triggers the open offer. Meanwhile, the independent directors committee (IDC) set up by Mindtree that was supposed to give its recommendations to shareholders on the L&T open offer on May 10, did not do so. According to reports, the IDC is waiting for SEBI’s approval before giving any recommendations.

Since the Mindtree-L&T takeover saga began, the whole journey has been anything but smooth, right from its acquisition of a majority stake, to the proposal, to launch of the open offer.

In India’s first hostile takeover bid, the engineering major signed a definitive agreement to buy Siddhartha and his coffee enterprise’s 20.32 percent stake in Mindtree at Rs 980 per share on March 18. The company formalised the deal in April.

In March, L&T also said that it would increase its stake to 66.32 percent through an open offer for 31 percent and an open market purchase of 15 percent.

The move was against what Mindtree founders wanted since they did not want to be a part of large conglomerate. Meeting media persons then, CEO Rostow Ravanan said that why is a conglomerate like L&T wants to buy a company that is least interested in being acquired. “Why can’t they build one,” he said then.

The weeks leading up to the buyout of Siddhartha’s majority stake by L&T saw the founders of Mindtree taking all necessary steps of fend off a hostile takeover bid. This included the buyback of shares or looking for another white knight. The company’s move failed at both ends.

It did not end there however. Between March and now, both the companies in question have raised concerns about the way the whole deal panned out.

While Mindtree has raised questions about the legality of the open offer and had written to SEBI, L&T questioned the announcement of the highest dividend of Rs 27 per share by Mindtree and its board practices at a time when Mindtree is the target of an acquisition.

SEBI is looking into both the issues and is yet to give its approval.

It is unclear at this point in time if the approval will be in place before the proposed open offer that will start on May 14 and end on May 27.

While analysts say that the open offer is unlikely to start given that L&T is yet to dispatch the letter of offer to Mindtree, May 13 will be crucial for L&T. The engineering behemoth is looking to pick up a controlling stake and a possible merger with its technology subsidiary L&T Infotech.


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