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With L&T now holding a 51 per cent stake in Mindtree, top executives of the IT services firm, including CEO Rostow Ravanan, are unlikely to continue with the firm after its mid-July AGM.
L&T Chairman AM Naik had said he would like the current Mindtree management to continue for as long as it wants. However, sources said it would be difficult for the co-founders/promoters to do so, considering how fiercely they had opposed the takeover bid.
One of Mindtree’s co-founders, Subroto Bagchi, has already decided not to seek re-election to the board. He has returned to Odisha to take up a position with the State government, indicating the mood among the promoters.
“Going forward, if there is continued animosity between the Mindtree promoters and the L&T executives, Board decisions may be split, and management bandwidth could be severely constrained. Minority investors should be concerned that any prolonged uncertainty at the Board can lead to loss of shareholder value,” proxy advisory firm InGovern Research said in a note to investors.
The note said the induction of three L&T executives on the Board of Mindtree as non-executive directors leads to more uncertainty for the company. Since the current promoters consider the L&T acquisition as a hostile acquisition and have three board seats, there is the likelihood of a stand-off within the board, the note said.
Earlier this week, Singapore-based Nalanda Capital offloaded its entire 10.61 per cent stake through the open offer and Amansa Capital sold its 2.6 per cent stake, taking L&T’s total stake closer to 49 per cent.
Now, its stake has risen to 51 per cent. L&T expects to end up with a 66 per cent stake in Mindtree at the end of the open offer, with a total outgo of around ₹10,700 crore.
At present, Mindtree co-founders Ravanan, Krishnakumar Natarajan, Bagchi and NS Parathasarathy hold a 13.32 per cent stake in the company. Another co-founder, S Janakiraman, who is not classified as a promoter, owns 1.51 per cent.
They can all exit the firm through the open offer, which closes on June 28, though company sources said some may want to retain a stake.
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