Engineering major Larsen and Toubro (L&T) is continuing to buy shares of acquisition target Mindtree from the open market amid a delay in the open offer for the software services firm.
On Friday, L&T picked up an additional 1.5% stake in Bengaluru-based Mindtree to hike its shareholding to 28.45%.
The Mumbai-based conglomerate said in a BSE filing that it purchased close to 25 lakh shares in Mindtree on the open market at Rs 980 apiece. The total value of the transaction was Rs 245 crore ($35 million). This was the third of the open-market purchases that L&T made this week. It had bought 74,000 shares on Monday and another 4.5 lakh shares on Thursday.
Last week, L&T had picked up about 9 lakh shares in Mindtree to take its shareholding above 26%, enabling it to seek a seat on the company’s board.
Meanwhile, L&T group chairman AM Naik had said earlier this week that the delayed open offer for Mindtree would begin in another 10-12 days. The open offer had been delayed owing to queries posed by markets regulator the Securities and Exchange Board of India. L&T responded to SEBI’s queries only on May 10, as it had to wait for information from Mindtree.
The open offer was to begin on May 14 and end on May 27. The process has also delayed the Mindtree Independent Director Committee's recommendation to the shareholders on May 10, as L&T's letter of offer has not been issued yet, awaiting SEBI's approval.
Mindtree’s open offer price has been set at Rs 980 per share.
In one of the most high-profile hostile takeover bids in Indian corporate history, L&T had announced in March its intention to buy a 31% stake in Mindtree through an open offer after buying out a few large shareholders. While L&T is looking to pick up another 15% from the open market, its plan is to hike its overall stake in the firm to 66%.
Late last month, L&T had completed the purchase of almost 3.3 crore shares of the Bengaluru-based firm from its largest shareholder VG Siddhartha and two of his entities at Rs 980 apiece for more than Rs 3,200 crore for a 20% stake.
Mindtree's founders, 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.
L&T has two entities that cater to technology customers -- L&T Technology Services and L&T Infotech. Last month, the Competition Commission of India had approved L&T's proposal to take over the IT services firm.