The open offer of L&T to buy Mindtree shares has been postponed as the engineering major is yet to get a nod from the Securities and Exchange Board of India (SEBI).
The open offer to buy 31 percent Mindtree shares was scheduled on May 14. It is now delayed by a week to a fortnight, according to reports.
The market regulator SEBI had asked L&T for clarifications and received a response only late night on May 10. This has delayed the approval process.
This delay had made the committee of independent directors set up by Mindtree unable to give their recommendations to its shareholders whether to go for the open offer or not.
According to analysts, independent directors can give recommendations only after the letter of offer has been dispatched by L&T. In addition, the recommendations should be made two days prior to the start of the open offer. However, it could not happen without SEBI approval in place.
In an email statement to Moneycontrol on Friday, Apurva Purohit, Chairperson, IDC, said the committee will follow the due process and there is no fixed date for giving recommendations as it is linked to the time when the letter of offer is issued and the commencement of the open offer.
Purohit, said in the statement, “The IDC will be following the required process as per law, and the recommendations will be given within the timelines prescribed under the takeover regulations.”
In India’s first-ever hostile takeover bid, L&T signed a definitive agreement to buy 20.32 percent from VG Siddhartha and his coffee enterprise for over Rs 3,000 crore on March 18, 2019. The deal was formalised last month.
The company said it will buy an additional 46 percent through the open market purchase of 15 percent shares and 31 percent through an open offer. This puts the total value of the acquisition at Rs 10,700 crore at Rs 980 per share.
L&T on May 9 upped its stake to 25.93 percent in Mindtree. A stake of over 25 percent stake in Mindtree means that L&T can call for board meetings and seek a seat on the Mindtree board. Sources said L&T had raised concerns about Mindtree’s governance and board practices and these matters would be the focus for L&T management.