L&T agrees to acquire 20.32 stake in Mindtree

Larsen & Toubro Ltd. (L&T) has entered into a definitive agreement to acquire the shares of Mindtree Ltd.

The cost of acquisition amounts to Rs. 10,733 crore and will be paid in cash.

The company has entered into a share purchase agreement on Monday, March 18, 2019 with Coffee Day Trading Limited and Coffee Day Enterprises Limited for the acquisition of 3,33,60,229 equity shares of Mindtree aggregating to 20.32 per cent of the paid-up equity share capital of Mindtree at a price of Rs. 980 per share.

The company will also make an open offer at a price of Rs. 980 per share to acquire 5,13,25,371 equity shares of Mindtree aggregating to 31 per cent of the voting share capital of Mindtree, in accordance with the requirements of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 2011.

The purpose of the acquisition is to improve the revenue and profit of the Asset Light Services nosiness portfolio of the company as well as the consolidated group performance. This would result in an improvement in the consolidated return on equity while further diversifying the consolidated group revenue and profits into the IT and technology services areas.

L&T’s step-down subsidiary, L&T Mutual Fund Trustee Ltd. manages numerous mutual fund schemes in a fiduciary capacity. These schemes hold nearly 1.08 per cent of the total equity share capital of Mindtree Limited in aggregate as of December 31, 2018. However, L&T does not take or influence any investment decisions pertaining to such MF schemes.

Mindtree belongs to the information technology and outsourcing industry. Its net-worth stood at Rs. 28,381 million as on March 31, 2018. For the same period, the company reported a turnover of Rs. 53,250 million on a standalone basis.

The acquisition is subject to the approval of the Competition Commission of India (CCI), Securities and Exchange Board of India (SEBI) and anti-trust regulatory authorities in USA and Germany.

On Tuesday, the shares of L&T opened at Rs. 1,373.95 and hit a high and low of Rs. 1,376.95 and Rs. 1,353.25, respectively. At 11:03 am, the stock was trading at Rs. 1,356.30, down 1.64 per cent.

Meanwhile, the shares of Mindtree opened at Rs. 978.00 and hit a high and low of Rs. 978.00 and Rs. 942.65, respectively. At 11:05 am, the stock was trading at Rs. 945.75, down 1.74 per cent.