Shareholders Stand By Mindtree Amid L&T’s Hostile Bid, Says CEO Rostow Ravanan
Rostow Ravanan, managing director and chief executive officer at Mindtree Ltd., said shareholders stand by the software services provider even as Larsen & Toubro Ltd. has mounted a hostile bid.
The company will constitute a committee of independent directors to consider and provide “reasoned recommendation” on the L&T's offer, Ravanan told BloombergQuint in an interview. The panel will have to submit suggestions before L&T's open offer goes online on May 14.
L&T agreed to acquire 20.3 percent in Mindtree from VG Siddhartha and his Coffee Day Group and also intends to purchase another 15 percent from the open market, and also make an open offer at Rs 980 apiece for 31 percent more to take control. Mindtree then called off its buyback plan.
Ravavan said the shareholders of the company are “very vocally supporting us because this team, through strategy and culture of the company, has delivered exceptional results”.
Mindtree's work culture, according to Ravanan, has been crucial to delivering results. If a certain ecosystem performs at an optimal level then one mustn't try and change it, he said. “The strategy and culture should be left undisturbed.”
Watch the full interaction here:
Here are the edited excerpts from the interview:
What has gone through the time when the board decided to take up the buyback and now calling it off? Can you tell us about what transpired between these two meetings and the reason why the buyback was called off?
The board considered multiple options. The board has called a meeting to evaluate a buyback and we thought it is good from a shareholder perspective. It is also in line with good practices from the rest of our industry. Many of our other peer companies have initiated similar exercise. So, we initiated this exercise keeping all of those perspectives in mind.
However, some factors have changed including the open offer announced by L&T last Monday. Keeping some of the changed circumstances in mind and after receiving advice from experts, the board has decided to call off the buyback plans at the moment.
Mindtree is in process of constituting a panel now with regards to addressing L&T's unsolicited offer. What this panel will do in terms of objectives? What are the main areas that this panel is expected to address?
Under the law, there is a very specific obligation that is levied on independent directors to form a committee among themselves and make a recommendation to shareholders on the offer price which L&T has given in its open offer. That is the sole objective of this committee to evaluate all the dimensions of the open offer announced by L&T and make a recommendation to shareholders whether they should accept or not accept this offer. That's the sole purpose of this committee.
In case, if the committee finds that there are various factors that may be playing out in favor of L&T coming and taking over, how is the board expected to move going forward then in that case?
The board always deliberates these issues very thoughtfully. It takes the decision which is considered and keeping in mind the interests of all stakeholders. Therefore, at the time when the decision needs to be taken it will be taken keeping in mind the interests of all stakeholders. It will be inappropriate and unfair to make any predictions on how that decision will go. But every single thing that our board and entire leadership team has done from the inception of Mindtree has always been keeping all stakeholders in mind.
How do you read the Rs 980 per share that L&T has put forward when it comes to open offer and what it intends to do in open market? In your opinion, do you think it is fair value?
I wouldn't like to comment on it because that is the matter which our independent directors are evaluating. Till the time they come up with their recommendation, it would not be fair for me to comment on it. I have an opinion as an individual and shareholder, but it will be inappropriate for me to express that at this stage.
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