Not a hostile takeover: L&T’s Naik

Bengaluru: L&T Group chairman A M

Naik

has said that, with the merger of

Mindtree

with L&T Infotech (

LTI

), there are no cultural issues between the two companies and, in fact, they are strengthening each other. “The initial disturbance that was created by owners was based on concerns that it was a hostile takeover. The bad publicity made people think if this will be properly integrated,” he said.

LTI acquired 61% in Mindtree in 2019. In the run-up to the acquisition, Mindtree founders said they would not quietly give in to the former’s hostile bid for their company. They had described it as an unexplainable transaction by a company that has a very different culture, one that would disrupt Mindtree’s relationship with customers and competitiveness in the market.

“They considered this to be a hostile takeover. It was not. One of the owners came to us and said instead of private equity firms, my employees will be happy if L&T were to take over. Many people wondered how the share price went up to Rs 700 and some of the owners sold it. Today, we are close to Rs 4,000 apiece. At the peak, we were Rs 5,000 (apiece) and we've increased the value in three years,” Naik said.

He further added, “It has been a case study in the industry how, in such a short time, a company can do so well in value-creation. I don’t think there is a cultural issue. Mindtree was known for its employee care and LTI has historically been in the top 5 companies which are most desired by employees to work.”

When asked about whether the combined employees’ strength would remain at current levels, Naik said there is a talent shortage in the IT sector and the two combined companies would be adding 20% additional headcount as the demand pipeline for IT services is robust with cloud and digital driving newer tech imperatives. “We are creating an integration committee which is completely independent. We are quite aware that in the bargain of merger, we shouldn't lose sight of the fact that this year we have to achieve a budget and we have to grow,” Naik added.

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