Engineering major Larsen and Toubro’s (L&T) open offer for software services major Mindtree has been delayed over queries posed to it by markets regulator the Securities and Exchange Board of India. L&T responded to SEBI’s queries only on Friday, 10 May, as it had to wait for information from Mindtree, a person privy to the development told TechCircle.
The open offer was set to begin on 14 May and end on 27 May, but it is not clear when it will commence though some media reports suggest that it could be delayed by up to 15 days.
Even after responding to SEBI’s queries, L&T will have to wait for five more days as the regulator may send further enquiries to which the company will have to submit responses. If there are no further queries, it is deemed as approved.
The process has also delayed the Mindtree Independent Director Committee's recommendation to the shareholders last Friday, as L&T's letter of offer has not been issued yet, awaiting SEBI's approval.
Email queries sent to L&T regarding SEBI's queries did not elicit a response at the time of publishing this report.
Meanwhile, last week in a flurry of small deals, L&T had picked up close to 26% stake in Mindtree, disclosures on the Bombay Stock Exchange showed.
Mindtree’s open offer price has been set at Rs 980 per share.
Late last month, L&T had bought almost 3.3 crore shares of the Bengaluru-based firm from its largest independent shareholder VG Siddhartha and two of his entities at Rs 980 apiece for more than Rs 3,200 crore for a 20% stake.
In what is one of the most high-profile hostile takeover bids in Indian corporate history, L&T had announced in March its intention to buy 31% stake in Mindtree through an open offer. L&T has plans to hike its overall stake in the firm to 66%.
Mindtree's founder-promoters, who own a little more than 13% stake in the firm, had opposed L&T's bid and have been working with large investment firms to shore up their stake in the company.
Mindtree had crossed $1 billion in annual revenue in the last financial year. It reported a 9% growth in net profit at Rs 198 crore for the fourth quarter. Net revenue for the quarter through March jumped 25.6% to Rs 1,839.4 crore.
Last month, the Competition Commission of India (CCI) had approved L&T's proposal to take over the Bengaluru-headquartered IT services firm.
Mumbai-based L&T has two entities that cater to technology customers - L & T Technology Services and LTI or L&T Infotech. The eight-decade-old group had over $17 billion in revenue and more than $1 billion in net profit in the last fiscal year.