L&T heads to US and EU for anti-trust watchdogs approvals for Mindtree takeover

Construction and technology major Larsen & Toubro (L&T) will be approaching competition regulators of some major geographies for approval of its Rs 10,700-crore bid for a controlling stake in Mindtree now that it has got the go-ahead from India's competition Czar. The Competition Commission of India (CCI) recently approved L&T's proposal to acquire up to 66.15 per cent stake in the Bengaluru-based information technology services firm.

"CCI approves the acquisition of up to 66.15 per cent of the total equity shareholding of Mindtree, on a fully diluted basis, by Larsen & Toubro," the competition watchdog announced on Twitter. L&T has to approach the anti-trust authorities in jurisdictions such as the US and European Union as Mindtree operates in those geographies, a report in Business Standard said.

"For transactions that exceed prescribed thresholds, the approval of the CCI becomes a crucial step. Particularly, it is a key regulatory approval for the acquirer," the report quoted Archana Tiwary, a partner at consultants J Sagar Associates, as saying. The obligation for taking the approvals of the competition watchdogs in the markets that the acquisition-targeted company operates is with the acquirer and a refusal of the approval could torpedo the deal.

L&T has launched the 'hostile bid' on Mindtree after buying VG Siddhartha's 20.32 per cent stake by placing an offer to buy a further 15 per cent stake from the open market, besides making an open offer to buy an additional 31 per cent stake at Rs 980 per share. For a controlling stake of 66 per cent in Mindtree, L&T is expected to shell out around Rs 10,700 crore. Mindtree closed on National Stock Exchange (NSE) at Rs 952.95 up 1 per cent on Friday with a bullish bias. L&T closed at Rs 1,373, about 0.37 per cent higher.

A panel of four independent Mindtree directors is evaluating L&T's open offer for providing reasoned recommendations to shareholders. The committee has appointed Khaitan and Co as the legal adviser and ICICI Securities as the financial adviser for assisting it in this process. The panel's advice to the shareholders is expected on May 10 though Mindtree can place a counter offer by April 16. The open offer, according to L&T's disclosures, will be between May 14 and May 27, the report says.

Mindtree founders, who had initially adopted a strident stand against the takeover, have indicated they were open to negotiations, marking a major change to their earlier stance. Krishnakumar Natarajan, executive chairman of Mindtree, told Business Standard that "middle ground" could certainly be explored through mutual discussions to protect the interests of all stakeholders of Mindtree.