The Competition Commission of India (CCI) late on Friday approved engineering conglomerate Larsen & Toubro Ltd's proposal to take over Bengaluru-headquartered IT services firm Mindtree Ltd.
"CCI approves (the) acquisition of up to 66.15% of the total equity shareholding of Mindtree Limited, on a fully diluted basis, by Larsen and Toubro Limited," the country’s monopoly watchdog tweeted.
L&T had last month purchased 20.32% stake in Mindtree from Cafe Coffee Day founder VG Siddhartha for Rs 3,629 crore.
The Mumbai-headquartered conglomerate said on March 18 that it would launch an open offer to buy up to 31% additional stake from Mindtree’s shareholders. The open offer will start on May 14 and end on May 27, L&T had said in a BSE filing.
It also plans to buy an additional 15% stake from the secondary market via its broker Axis Capital. This means that the engineering giant may spend as much as Rs 5,030 crore on the open offer and up to Rs 10,733 crore (around $1.6 billion) to buy the total stake.
Mindtree’s founders and promoters, who own around 13% stake in the company, have been vehemently opposing what they see as a hostile takeover bid. In a recent interview with TechCircle, executive chairman Krishnakumar Natarajan said said that L&T was not the right fit for Mindtree.
Mindtree’s founders had previously said that it could buy back shares from public shareholders to thwart L&T's takeover bid. However, the company's board dropped the buyback plan last month.
The company’s board has also formed a committee of independent directors that now will provide recommendations to shareholders on the offer made by L&T by May 10.
L&T has proposed to keep Mindtree operating independently for the time being, but also mentioned that it may consider a possible merger of Mindtree with L&T Infotech in the long run.