what was the situation that led to Mindtree becoming a target for acquisition?

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Ans:

Mindtree is known for its corporate governance and its ability to differentiate itself in the market. The promoters are of the opinion that the takeover by L&T would have huge negative consequences impairing Mindtree’s corporate culture, employee retention and client relationships. The promoters have thus vowed to unconditionally oppose the takeover attempt by planning to use 10% of the total Rs 2800 crore reserves to buyback shares. But this effort wont be enough to stop the infrastructure giant L&T from acquiring majority stakes. To understand why the promoters wont be able to stop this hostile takeover we need to look at the company’s shareholding data.

Promoter 13.32%

Public 86.68%

FII/FPI 40.18%

DII 10.73%

Non Institution 35.77%

As you can see, the promoters hold just 13.32 % stakes, this keeps them at the mercy of FIIs/DIIs and other non-institutional investors. But L&T would easily attract these non-promoter stakeholders especially the FIIs by offering them good premiums. So there is nothing that the promoters can do now in order to stop the deal. This is the reason a company should have at least 33% promoter shareholding in order to avoid such scenarios.

ekkarill92 answered 2 years ago

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