L&T; makes formal move to acquire Mindtree L&T;, the parent of L&T; Infotech (LTI), has announced its intent to acquire ~66% stake in Mindtree (MTCL) as top shareholder VG Siddhartha looks to monetise his stake. We expect the recent correction in LTI (rated BUY, trading at 17.6x/15.1x FY20E/ FY21E P/E) to reverse as its parent has indicated plans to run MTCL as an independent entity. In our view, distractions at MTCL as the promoters tussle with L&T; over leadership control can impair operating performance, though we don't...
The IT sector in India has largely been a gentleman's game, with no hostile takeovers so far. But that has changed with Larsen & Toubro (L&T) looking at a hostile takeover of Mindtree by purchasing V G Siddhartha's stake of the company. By buying up Coffee Day founder VGS's stake, they would now hold 20.3% of the company. This has been L&T's well-publicized first move. Mindtree is in 12 stock screeners today, including top losers, after the news.
As step 2, L&T is buying shares in Mindtree in the open market, purchasing up to 15% this way at a Rs. 980 share price. That would bring L&T's holding to 35.3%. As step 3, L&T has also announced an open offer to Mindtree shareholders, to get 31% of the company. This could bring L&T's stake up to a total of 66.3%, if it succeeds with all three moves.
L&T is clearly looking at growing L&T Infotech, and Mindtree is of a size that could make a difference. But the company has been struggling in recent quarters with order growth and margins, in a highly competitive IT midsize sector. Combine that with other dangers that come with a hostile takeover, such as multiple exits at mid and senior management levels, and the exits of founders, and L&T may have bitten off more than it can chew when it comes to this aggressive tech acquisition.
Sub.: Investor Presentation Pursuant to Regulation 46(2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, we enclose herewith a copy of updated Investor Presentation, which will be uploaded to our Investor Website http://investors.larsentoubro.com/ We request you to take note of the same.
It has earmarked an amount of INR107b for this acquisition, valuing MTCL at INR162b (+5% v/s current market cap of INR155b) or INR980/share. However, the promoters of MTCL (13.3% stake) may look to resist the hostile takeover by engaging with other shareholders, and hence, it could be a long-drawn process, in our view. Moreover, this is better utilization of its strong cash balance, especially in light of the rejection of the INR90b share buyback by the SEBI. Even though LT is still engaged with the SEBI for its planned share buyback, the MTCL acquisition lowers the chances of a buyback now, in our view. MTCLs acquisition raises a few questions on the capital allocation policy, especially given that LT has been on track to meet its RoE guidance of 18% by FY21 and divesting its non-core assets.
ICICI Securities Ltd | Retail Equity Research Larsen & Toubro (L&T;) has announced a three part all-cash deal to acquire MindTree Ltd. Firstly, L&T; has entered into a definitive share purchase agreement with VG Siddhartha and his related entities viz. Coffee Day Trading and Coffee Day Enterprises to acquire 20.32% in MindTree Ltd at | 980/ share aggregating to | 3269 crore. The offer...
Sub : Submission of information regarding loss of share certificates and issue of Duplicate Share certificates under Regulation 39(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("the SEBI Regulations"). Please find enclosed intimation of the loss of share certificates and issue of duplicate share certificates as received by us from Karvy Fintech Private Ltd., our Registrar and Transfer Agent, being submitted to you pursuant to Regulation 39(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. We request you to take the same on record.