L&T says Mindtree stake buy just an investment, asks other promoters to be rational

L&T-SN-SubrahmanyanNEW DELHI: Larsen & Toubro (L&T) on Tuesday said the stake purchase in midcap IT firm MindtreeNSE -1.99 % is just an ‘investment’ and asserted that the company would continue to function as an independent entity without any interference.

“There are certain criteria that we would want to be fulfilled, like any other investment,” said S N Subrahmanyan, CEO and MD of L&T.

The comment came at a time when existing Mindtree promoters are trying to resist a hostile takeover attempt and have called for a board meeting on Wednesday to consider a share buyback to soar up their defence.

The management of the engineering giant said while it has not thought about integration yet, but Mindtree makes enormous sense for its services business. “We look at all of our businesses as independent businesses,” he said.

On Tuesday, L&T Group Executive Chairman AM Naik said the stake purchase Mindtree is not a hostile takeover. “It is in the interest of the employees and promoters to get going with L&T,” he told ET Now.

L&T said Cafe Coffee Day owner VG Siddhartha wanted to sell his stake to a serious entity with similar values.

“From our point of view, we have done the right thing,” the company said, adding that there are many ways to enhance shareholder value.

Subrahmanyan says L&T intends to provide some guidance to Mindtree. “We would like to reassure Mindtree stakeholders of our governance values. We hope better sense, maturity and rationality will prevail among other promoters,” he said.

At 12.20 pm, Mindtree shares traded 1.79 per cent lower at Rs 945, while those of L&T were down 2.07 per cent at Rs 1,350. IT arm of L&T Infotech traded 3.43 per cent higher at Rs 1,627.25.

Subrahmanyan said while there are certain emotions and tepidity involved, but business is business. “We had a dialogue with the Mindtree management, who are personal friends. We feel lots of positivity going forward,” he said.

L&T had on Monday signed a deal to buy Siddhartha’s 20.32 per cent stake in Mindtree and also placed an order with brokers to pick up another 15 per cent of company shares from open market. The company has also made an open offer to buy additional 31 per cent stake.