L&T Acquires Majority Stake In Mindtree Limited in Hostile Takeover
- Over the course of the last four months, Larsen and Tourbo (L&T) has performed a hostile takeover of Mindtree Limited, with today’s report announcing that L&T has now acquired majority stake. Despite constant push-back from Mindtree to keep control of its company, L&T’s aggressive pursuit served to much too handle.
- Mindtree, which was founded in 1999, provides digital transformation and technology services to a multitude of high-impact segments.
- L&T’s IT service subsidiary, L&T Infotech (LTI), is a global leader in technology consulting and digital solutions, offering application development, maintenance and outsourcing, enterprise solution, infrastructure management, and platform-based solution services.
Timeline of Hostile Takeover
- June 17th, 2019 – June 25th, 2019: A week after purchasing 7% of Mindtree Limited from public shareholders; on June 24th, 2019, L&T agreed to buy an additional 10.61% stake from Singapore-based Nalanda Capital at $14.14 per share, paying a 1.6% premium to market price. The total transaction size was $246.56 million. The deal increased L&T’s share in Mindtree to 46%. Once this was announced, it was clear that there was nothing Mindtree could do to prevent L&T from taking over the company. The following day, on June 25th, it was reported that L&T is set to control 51% of Mindtree, as equity holders PremjiInvest (1%), Arohi (2.5%), and UTI (2.9%) are all expected to sell their shares sometime this week.
- April 6th, 2019: Larsen and Tourbo (L&T) announced that it had secured approval by the Competition Commission of India to acquire up to 66.15% of total equity shareholding in Mindtree Limited.
- March 19th, 2019: L&T completed its first step in a hostile takeover by acquiring 20.4% stake from Indian businessman VG Siddhartha. Siddhartha, who is the founder of Indian café chain Café Coffee Day, invested $8 million into Mindtree Limited back when it was founded in 1999. Siddhartha was forced to sell his shares because of a default in payments to Infrastructure Leasing and Financial Services Ltd. He settled with L&T at a price of $14.08 per share, receiving roughly a 1.8% premium to market price with an Enterprise Value of just over $2.4 billion dollars. Mindtree executives expressed to Siddhartha that a deal with L&T would be the beginning of a hostile takeover, but he did it anyways as they were the highest bidder. Siddhartha received proceeds of $469.36 million from the sale of his equity stake, which he had slowly accumulated over the last two decades.
A Trend of Multi-Billion Dollar Digital Transformation Acquisitions
- This hostile takeover continues a recent trend acquisitions in the Digital Transformation software and services space. Just recently, on June 24, 2019; French IT and digital transformation consultancy Capgemini SE acquired Altran Technologies, a global engineering and R&D services consulting firm, for $4.09 billion.
- Earlier in the month; Salesforce paid a 42% premium at an Enterprise Value of $16.09 billion to acquire Tableau Software, Inc., a leading provider of data analytics and visualization software. Unlike Mindtree, who’s value comes from its service offerings, the premium paid for Tableau was due to its software capabilities and potential to be integrated into Salesforce products.
- In July of 2018, Mindtree competitor Syntel, Inc., a worldwide provider of digital transformation services, was acquired by Atos SE for $3.67 billion, at an Enterprise Value / LTM EBITDA of 11.4x.
Mindtree Has Grown Its Value by Acquiring Companies
- By the end of 2014, Mindtree had an Enterprise Value of $1.5 billion. However, by acquiring multiple companies over the following years, Mindtree was able to grow its value by 43%, with a current Enterprise Value of $2.15 billion.
Mindtree Limited Transaction History
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