The promoters of IT company Mindtree on Tuesday said the company will continue to oppose Larsen & Toubro's (L&T) take over attempt.

Calling L&T's hostile takeover a great threat to Mindtree, chairman and co-founder Krishnakumar Natarajan said the company has consistently delivered strong and favourable financial results to shareholders.

Natarajan said, "Hostile takeover is unprecedented in the industry and can undo all progress we have made and set our organisation back."

He said the transaction with L&T will impair Mindtree's ability to differentiate itself in the market and there is no strategic advantage but, it will be value destructive for the IT company.

Mindtree has asked five questions to L&T on the takeover bid.

1) You have chosen to mount the first hostile takeover in the IT industry. You will forever be remembered for this. Is this example you want to set?

2) You are 18x Mindtree. Why can't you build a technology business using your own resources?

3) Customers chose is for unique culture. They will take business elsewhere. You would have demolished shareholder value. Is that right?

4) Mindtree is a people business. They will go without a mission. What will you be left with?

5) If L&T behaves hostile to entrepreneurs, what message are you giving to startups in the country?

L&T on Monday announced a hostile takeover bid involving a three-pronged acquisition of Mindtree, wherein it will pay Rs 980 a share for a 20.3 percent stake of VG Siddharth, buying 15 percent from the public and mounting an open offer at Rs 980 a share later.

Thus, it plans to acquire 67 percent for a consideration of Rs 10,733 crore.

The company has also placed an order with brokers to pick up another 15 percent of the company shares from the open market. Subsequent to these deals, L&T would make an open offer to buy an additional 31 percent stake through an open offer, it said.

On March 14, sources told CNBC-TV18, that L&T approved the acquisition of Siddhartha's 20.4 percent stake in Mindtree at Rs 981 per share.

All the three acquisitions are being done at Rs 980 per share, a premium of 1.8 percent over Monday's closing price of Mindtree on the BSE. Mindtree closed on the BSE at Rs 962.50 a piece.

L&T would pay Siddhartha Rs 3,269 crore and Rs 5,030 crore for the open offer, as per filings made by L&T and Mindtree.

The company would shell out around Rs 2,500 crore for acquiring the additional 15 percent stake. Together, the outgo would be around Rs 10,800 crore, according to a rough calculation.

This would be the first hostile takeover bid in the country's IT sector.

First Published:Mar 19, 2019 3:12 PM IST