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L&T to acquire significant stake in Mindtree in an allcash transaction subject to regulatory approvals

Posted On: 2019-03-18 21:50:26

Larsen & Toubro Limited (NSE: LT, BSE: 500510), one of India's leading engineering, technology and construction conglomerate, has today entered into a definitive Share Purchase Agreement (SPA) with Mr. V G Siddhartha and his related entities namely, Coffee Day Trading Limited & Coffee Day Enterprises Limited, to acquire 20.32% stake in Mindtree, a global technology services and digital transformation company. L&T will purchase this stake at a price of Rs.980 per share, aggregating to approximately INR 32.69 billion.

Immediately following the filing of the Public Announcement, L&T has placed an order with its broker for on-market purchase of up to 15% of share capital of Mindtree at a price not exceeding INR 980 per share. Pursuant to execution of the SPA, the aforementioned 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% of the outstanding shares of Mindtree at a price of INR 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.

This acquisition is in line with L&T's stated strategy of focusing on services and asset light businesses to drive profitable future growth. This further adds to L&T's attractive IT services platform with a focus on new-age digital / cloud solutions, making it highly complementary to L&T's current technology services portfolio. Mindtree's offerings to its customers include application development & maintenance, infrastructure management services, independent testing, package implementation, consulting and IP products related solutions.

While Mindtree would remain an independent listed entity, L&T would 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.

Commenting on the occasion Mr. S N Subrahmanyan, CEO & Managing Director said: "This acquisition is part of our strategy to deliver industry leading IT services to our clients worldwide. 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".

KPMG Corporate Finance is the lead advisor for the transaction. Axis Capital Limited - lead financial advisor and Citigroup Global Markets are acting as financial advisors to L&T. AZB & Partners and Baker & McKenzie LLP are acting as legal advisors to L&T.

Shares of LARSEN & TOUBRO LTD. was last trading in BSE at Rs.1378.85 as compared to the previous close of Rs. 1397.35. The total number of shares traded during the day was 176903 in over 6139 trades.

The stock hit an intraday high of Rs. 1411.3 and intraday low of 1370.25. The net turnover during the day was Rs. 245303683.


Source: Equity Bulls

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