Mindtree board is preparing for a pitched battle in case of a hostile takeover attempt by Larsen & Toubro (L&T) that is in talks to buy up the entire stake that Cafe Coffee Day founder VG Sidhartha controls, making possible an open offer with the likelihood of a management change.mindtree.com

Even as Mindtree promoters are trying to tap major institutional investors to fend off a hostile takeover threat from engineering major Larsen & Toubro (L&T), Subroto Bagchi, a co-founder, has decided to quit a government assignment and return to Bengaluru and help the company battle the takeover bid.

L&T board has approved buying up the entire stake in Mindtree of Café Coffee Day founder VG Sidhartha, one of the biggest shareholders in the Bengaluru-based IT services company. Sidhartha controls about 21 per cent stake in Mindtree through his stake and through the companies he controls, having begun investing in the company in 1999, the year of its founding. Apparently, Sidhartha has pledged the stake he controls in Mindtree to raise business loans to the tune of about Rs 3,000 crore, which may be equal to the value of the stake he controls. Apart from L&T, investment companies KKR and Barings also have been talking to Siddhartha for stake transfer.

Mindtree is bracing to fight off a likely hostile take over bid by Larsen & Toubro Ltd (L&T).mindtree.com

While Mintree promoters have expressed the view that Sidhartha being a long-standing investor in Mindtree and being one of its largest shareholders will not do anything detrimental to the company or its promoters. However, if the share sales with L&T goes through, the possibility of the engineering company with a technology arm, L&T Infotech, making an open offer and effecting a management change would become real. Under the Securities and Exchange Board of India (Sebi) regulations, the shareholder with a certain percentage of stake can make an open offer. There have been reports that the board of directors of Mindtree was also considering a share buyback programme to battle the takeover threat.

Bagchi on Sunday resigned as head of the Odisha Skill Development Authority in a bid to return to Bengaluru. He said on his Twitter handle: "An imminent threat of a hostile takeover of Mindtree has made me resign from the (Odisha) government, (so that I will be) able to go, (and) save the company," he said. "I must protect the tree from people who have arrived with bulldozers and chainsaws so that in its place, they can build a shopping mall."

Subroto Bagchi
Subroto Bagchi has resigned from his assignment with Odisha government to return to Bengaluru to help Mindtree fend off a likely hostile takeover bid by Larsen & Toubro (L&T).mindtree.com

Terming Mindtree as a national resource, Bagchi argued it was not conceived as an 'asset' to be bought and sold. "I need to be there in its time of difficulty. Hence, (I have taken) the hard decision to return," Bagchi said.

Bagchi, who co-founded Mindtree in 1999, returned to his native state Odisha in 2016 after quitting as executive chairman. His return signals a bitter boardroom battle that the company management is preparing for to prevent any rival technology firm from coming on board.