Shareholders are bracing for boardroom fights if L&T unable to take controlling stake in Mindtree through its open offer The "tussle" for control of Mindtree may drag on well

post the L&T's open offer for 31% stake at Rs 980 per share, believe some of the shareholders of the mid-sized information technology (IT) firm DNA Money spoke to. With Pulak Prasad

of Nalanda Capital, along with Mindtree management, reportedly rallying with minority investors to not surrender their stake to L&T, "the tussle will go beyond the open

offer," one of the shareholders, who owns a minority stake, spoke on condition of anonymity. According to him, if Prasad, who owns 10% stake in Mindtree, and the four founders with

influence in the market. So, they may be able to gain some shares from the open offer, but I don't know whether they (their stake) may be able to come up to the level where they will be

able to take control. In that case, we are likely to see the fight continuing even after the open offer in the boardroom". He further added, "at this point in time, surely they

(L&T) can ask for a change in Board structure but they can't change the Board. Whereas when they reach 51%, they may be able to have greater influence. As things stand today, I

doubt very much they (L&T) will be able to reach 51%". As per Mindtree's shareholding pattern put up on the BSE website, the promoters owned 13.32% stake as on March 31, 2019.

While foreign institutional investors (FIIs) hold 39.26%, non-institutional investors own 35.93% and 9.02% is held by mutual funds. L&T launched a hostile takeover for Mindtree following

its deal to buy the 20.32% stake of V G Siddhartha, who owns Café Coffee Day. The state-owned infrastructure major is said to have followed it up by picking additional shares of the

Bengaluru-based company from the public shareholders in the open market and taking it up to over 28%. With its recent open offer for 51.3 million shares, L&T wants to take its holding up

to 66%. However, with Mindtree founders – Rostow Ravanan, N Krishnakumar, Subroto Bagchi and N S Parthasarathy – and Prasad reportedly trying to influence small investors to not sell their

shares to L&T, the engineering behemoth could find it difficult to reach that mark. Institutional investors of both companies have now reportedly written to Sebi on the matter asking for

a probe into Prasad's behaviour. They have alleged he has been acting in concert with Mindtree's promoters. In their complaint, they have argued that since the joint shareholdings

of Prasad, the promoters and some small investors – termed as Persons Acting in Concert (PAC) – was over the regulatory threshold of 25%, then as per regulations 3(1) and 4 of SAST

regulations, it should mandate a counter open offer from them to L&T. An IT analyst with a leading brokerage firm, who did not want to be named, however, said while it was mandatory for

an entity to have shareholding of 25% to make an open offer to increase its stake in a company, it was up to the shareholders (with 25% and more stake) whether they want to do so or not. He

also said if the shareholders decide not to surrender then L&T cannot do much. "Shareholders can refuse to surrender their shares if they see a higher market value in the future.

They can take a stand; that option is available to the founders/promoters and shareholders. Nobody can force them to sell," he said. According to him, the success of L&T's open

offer will depend on the "tenacity of the investors to stay put at this point in time". He does not see Mindtree promoters and Prasad coming up with a competitive offer to

L&T's or the latter raising the bid price to attract investors. "L&T might be feeling Mindtree is rightly priced with a reasonably high P/E for an IT firm and may not feel

that the offer price has to be raised further. It (Mindtree) has been at around Rs 980 for almost 3-4 months. It hasn't changed drastically. It shows that possibly investors see it as

the real value of Mindtree," he said.