Larsen & Toubro has entered into a definitive share purchase agreement (SPA) with coffee baron V G Siddhartha and his related entities to acquire 20.32 per cent stake in Mindtree, a global technology services and digital transformation company. The entities include Coffee Day Trading and Coffee Day Enterprises. L&T will purchase this stake at a price of Rs 980 per share aggregating to about Rs 3,269 crore. Immediately after the filing of public announcement late on Monday, L&T placed an order with its broker for on-market purchase of up to 15 per cent of share capital of Mindtree at a price not exceeding Rs 980 per share.
After execution of the SPA, the market order for share purchase and with the intent to acquire majority stake in Mindtree, L&T has announced an open offer as per SEBI Takeover Regulations (as required under Regulation 3 (1) and (4) to the public shareholders of Mindtree to purchase up to an additional 31 per cent of the outstanding shares of Mindtree at a price of Rs 980 per share in cash. The acquisition is subject to inter alia receipt of necessary regulatory approvals and satisfaction of other conditions as specified in the offer documents. "L&T has sufficient financial flexibility to fund the entire transaction through its existing financial resources," the company informed stock exchanges in regulatory filings.
"This acquisition is in line with L&T's stated strategy of focusing on services and asset-light businesses to drive profitable future growth," it said. This further adds to L&T's attractive IT services platform with a focus on new-age digital and cloud solutions, making it highly complementary to L&T's current technology services portfolio. Mindtree's offerings to its customers include application development and maintenance, infrastructure management services, independent testing, package implementation, consulting and IP products related solutions. While Mindtree will remain an independent listed entity, L&T will extend support to Mindtree in its business going forward. Mindtree will benefit from access to larger client base and wider product offerings under a common parentage giving higher returns to shareholders of Mindtree.
"This acquisition is part of our strategy to deliver industry-leading IT services to our clients worldwide," said Managing Director and CEO S N Subrahmanyan. "It will help propel L&T's technology portfolio into top tier of Indian IT companies." Mindtree has a well-established management team which has earned the respect of the market in terms of its service offerings and business practices. "This acquisition will allow L&T to further enhance shareholder value for both its own shareholders and Mindtree shareholders in the medium to long term," said Subrahmanyan.