SHAILESH ANDRADE / REUTERS
The ongoing battle between construction company Larsen & Toubro
(L&T) and Mindtree
for a controlling stake in the latter is being viewed as the first hostile takeover in India's IT industry. However, L&T Chairman AM Naik does not agree with this view.
"This is no hostile bid. The shareholder approached L&T first — how can that be hostile move by us? We are open to further negotiations with Mindtree — our doors are always open. L&T has done much more for its employees than Mindtree for theirs. Our culture has been called the best by several studies. So, it is ridiculous to state otherwise," Naik told The Economic Times
. He added that Mindtree will be allowed to operate as an independent entity after the merger.
On March 19
, L&T bought the entire stake of VG Siddhartha in Mindtree and launched an open offer for an additional 31 percent. It aims to take its stake in the company to 66 percent.
The promoters of the IT services company vocally opposed the takeover, saying that L&T will bring no value to their company. The Mindtree promoters, including Chairman Krishnakumar Natarajan, Subroto Bagchi, Chief Operating Officer NS Parthasarathy and Managing Director Rostow Ravanan, hold a 13.32 percent stake in the company.
Bagchi condemned L&T's attempt to take over Mindtree and resigned from his government position to 'save the company'
. To this, Naik said, "Who is Bagchi to ask why L&T cannot build a Mindtree? We have built huge businesses and in the same space too. We will do what we can to grow our businesses further."
Naik himself has protected L&T from two hostile takeover bids, once by Grasim Industries
and before that by Reliance Industries
. To secure the company from more such takeover attempts, he set up the L&T Employees' Welfare Foundation as a significant stakeholder in the company. The trust has nearly 19 percent stake.
Original Source: https://www.moneycontrol.com/news/business/our-doors-are-always-open-lt-chairman-am-naik-to-mindtree-3694441.html