Mindtree Limited: Defense Against Hostile Takeover

Mindtree Limited (Mindtree) was promoted by a group of first generation entrepreneurs and had established itself as a successful digital business company. Larsen & Toubro Limited (L&T), a successful conglomerate primarily in the business domains of construction and engineering, was looking to increase its footprint in information technology services. In 2019, L&T acquired more than 20 per cent stake in Mindtree and sought to increase its stake to 66 per cent by acquiring shares in the open market and making open offers to shareholders. Though Mindtree’s management and promoters were very much opposed to this takeover attempt, the company’s ability to keep a determined acquirer with deep pockets at bay would not come easy. The promoters of Mindtree, who had nurtured the company for the last two decades, faced the real threat of losing management control to L&T, the large and aggressive corporate group.

This case is best suited for courses that focus on mergers and amalgamation, corporate restructuring, and investment banking at the graduate level. This case can also be used in a course that utilizes entrepreneurial finance to highlight needs to ring-fence control and discuss methods of doing so. The case aims to understand the motivations behind mergers as well as strategies that can be adopted by attractive but smaller entities to defend against hostile takeover bids. The roles of a target company’s board of directors and the difficulties that can arise in a hostile merger are also highlighted. After working through the case and assignment questions, students will be able to<ul><li>identify reasons behind mergers;</li><li>analyze various strategies that can be used to prevent and defend against hostile takeover bids;</li><li>understand the focuses of takeover regulations;</li><li>appreciate the difficulties that can be encountered in hostile takeover bids; and</li><li>understand the roles of a target company’s board of directors.</li></ul>

• Hostile takeover, Defense Strategy, M&A,