Bengaluru-based IT services firm Mindtree Ltd has dropped a plan to buy back shares in the face of a takeover bid from engineering company Larsen and Toubro (L&T).
The company’s board has also formed a committee of independent directors that will provide recommendations to shareholders on the offer made by L&T, Mindtree said in a stock-exchange filing. The panel will suggest a course of action to shareholders by May 10.
Mindtree founders, which own a little more than 13% stake in the company, had previously said that it could buy back shares from public shareholders to thwart L&T's takeover bid.
L&T had last week launched a hostile bid to take a controlling stake in Mindtree. It bought a 20.32% stake in Mindtree from Café Coffee Day founder VG Siddhartha, asked its broker to buy 15% from the secondary market, and made an open offer to purchase up to 31% more from public shareholders.
The open offer will start on May 14 and end on May 27, L&T said in a separate filing on Tuesday.
L&T may spend as much as Rs 5,030 crore on the open offer and up to Rs 10,733 crore to buy a total of 66.32% stake in Mindtree.
Mindtree founders have been opposed to the L&T offer. In an interview with TechCircle, executive chairman Krishnakumar Natarajan said that L&T is not a right fit for Mindtree.