INSUBCONTINENT EXCLUSIVE:
latter could sell his 21 per cent stake in the IT firm
LT Infotech may then launch an open offer for an additional 31 per cent stake in Mindtree
The promoters of the target company are resisting the takeover and have called for a board meet on Wednesday to consider a share buyback,
capabilities rather than scale up casts doubt over a possible $1.1 billion hostile takeover, where the incremental capability too is
would still go with the MindTree stock because it is fundamentally good
In a case of a hostile takeover, minority shareholders will gain because if things get messy, then either of the sides will bid higher to
positivity on the fundamental side, there is no downside for Mindtree
Shares of LT Infotech fell 3.33 per cent to Rs 1,573.30.
A buyback, if announced will increase the cost of transaction for LT Infotech
For minority shareholders, the realisation is likely go up.
Ambit Capital in a note said that geographic exposure of LT Infotech more or
less mirrors that of Mindtree
focusing on fewer verticals and fewer customers, the vertical complementarity/scale is not compelling enough a reason for such an
like Mphasis (May 2013), Hexaware (March 2012) and EXL Services (February 2011, link) but none of those speculations turned out to be
shareholder value of the combined entity by 40 per cent, as per our scenario analysis
A scenario of a hostile takeover by LT followed by delayed merger should have different dynamics depending on the structure of the
verticals.
Total contracts value (TCV) wins for the IT company is up 16.8 per cent YoY in 9MFY19, reflecting good underlying business growth
over FY18-FY20E, one of the highest in the industry
A possibility of management changes following takeover (if any), is a key overhang for the stock.
