Co-founder Bagchi returns to save Mindtree from L&T’s takeover bid
18 Mar 2019
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Mindtree co-founder Subroto Bagchi has resigned as the head of Odisha's Skill Development Authority to return to Mindtree, the information technology company he co-founded in Bengaluru, from a hostile takeover by engineering and construction conglomerate Larsen and Toubro.
Larsen & Toubro (L&T) is reported to be offering as much as Rs7,000 crore to acquire 20.4 per cent in Mindtree, currently held by its largest shareholder V G Siddharth. L&T had earlier proposed to acquire the Mindtree stake for about Rs3,000 crore or Rs981 per share.
He announced the resignation on late Sunday night on Twitter, saying that he must protect the company from the people trying to destroy it.
“An imminent threat of hostile takeover of Mindtree has made me to resign from the government to be able to go, save the company. I must protect the Tree from people who have arrived with bulldozers & saw chains to cut it down so that in its place, they can build a shopping mall.
“Mindtree has not been designed as an asset to be bought and sold,” he wrote in another tweet. “It is a national resource. It has a unique culture that humanises the idea of business. It sets the standards of corporate governance. I need to be there in its time of difficulty. Hence the hard decision to return.”
Meanwhile, according to a Moneycontrol report, Mindtree board members Krishnakumar Natarajan and Rostow Ravanan have written to the L&T against the possible hostile takeover.
In the letter that was sent to the L&T board and shared on Twitter by CNBC TV18, the reports of hostile takeover by L&T has alarmed various stakeholders of Mindtree including institutional investors, clients, customers and employees.
Many of them have expressed to the management unequivocally that they would not like to be a part of the organisation that is “culturally perceptibly different from Mindtree”, the report said.
“I also recollect several email exchanges between us in Jan/February 2019 where we had expressed our concerns based on data relating to previous integrations of large IT service providers that any transaction with you would be value destructive to Mindtree and all its stakeholders,” the letter reads.
Larsen & Toubro (L&T) is making a hostile bid to acquire about 21 per cent stake in IT services company Mindtree and is reported to be offering up to Rs7,000 crore to buy out its largest shareholder V G Siddharth’s 21 per cent stake in the company.
A report in The Times of India, citing sources directly involved in the matter, said L&T will buy out Siddhartha and companies which he founded, following which it will make an open offer to the public shareholders of Mindtree.
Meanwhile, Subroto Bagchi, one of the founding members of Mindtree Ltd, resigned as the head of Odisha's Skill Development Authority to return to the information technology company in Bengaluru. He announced the resignation on late Sunday night on Twitter, saying that he must protect the company from the people trying to destroy it.
An imminent threat of hostile takeover of Mindtree has made me to resign from the government to be able to go, save the company. I must protect the Tree from people who have arrived with bulldozers and saw chains to cut it down so that in its place, they can build a shopping mall.
“Mindtree has not been designed as an asset to be bought and sold,” he wrote in another tweet. “It is a national resource. It has a unique culture that humanises the idea of business. It sets the standards of corporate governance. I need to be there in its time of difficulty. Hence the hard decision to return.”
Siddhartha, who is a promoter of Coffee Day Enterprises Ltd and Coffee Day Trading Ltd, held a 3.33 per cent stake in Mindtree as of December-end, BSE data showed. Coffee Day Enterprises and Coffee Day Trading carry a combined 17.08 percent stake in Mindtree.
Ashok Soota, another co-founder of the Bengaluru-based tech company, said in an interview to CNBC-TV18 that L&T does seem poised to buy VG Siddhartha’s stake.
