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Mindtree: hostile takeover bid by Larsen and Toubro

Sudhir Naib (Department of Management, Bharatiya Vidya Bhavan, New Delhi, India)
Swati Singh (Department of MBA, Bharatiya Vidya Bhavan, New Delhi, India)

Emerald Emerging Markets Case Studies

ISSN: 2045-0621

Publication date: 15 November 2019


Learning outcomes

The case explores information technology (IT) company Mindtree’s journey of 20 years from the time it was founded in 1999 to be different from others, and how it became a target for acquisition by an Indian diversified conglomerate in 2019. It offers insights into developing organizational culture and values in an organization, threats faced by a company when promoters dilute their shareholding, and the strategies followed by the acquirer and the target firm. It also deals with the challenges in the acquisition of a knowledge service digital firm. After working through the case and assignment questions, students will be able to: identify the circumstances under which a company can become a target for hostile takeover; describe motivations of the acquirer firm in an acquisition; distinguish between acquisition and hostile takeover, and discuss salient features of Securities and Exchange Board of India (substantial acquisition of shares and takeover) regulations, 2011; list the defenses a target firm can adopt to ward off hostile acquirer; explore strategies followed by acquirer and target firms; analyze important ingredients of organization culture, and importance of cultural congruence in an acquisition; and discuss challenges faced by an acquirer in India, namely, legal, retention of clients and key people in the target firm particularly in hostile environment.

Case overview/synopsis

The case explores how ten IT professionals founded mid-tier IT services company Mindtree in 1999 in Bengaluru, India (home to Infosys and Wipro) to be different from others – by inserting themselves at a higher level in the value chain, being philanthropic as a part of broader business strategy to attract a certain kind of employee and customer. It developed a culture of equality, consideration and respect. Its attrition rate of 12 to 13 per cent was significantly lower than the Industries. Mindtree crossed annual revenue of US$1bn for FY 2019 and was growing at twice the industry’s growth rate. The most attractive part was that its proportion of revenue from digital services was about 50 per cent as compared to 25-35 per cent of other services vendors. With time, the share of promoters/founders declined and increased one investor’s shareholding of V. G. Siddhartha and his related entities. In early March 2019, the promoters’ stake was 13.32 per cent while Siddhartha had 20.32 per cent. Larsen and Toubro (L&T) one of India’s conglomerate entered into a share purchase agreement on March 18, 2019 with Siddhartha to acquire his 20.32 per cent stake. Immediately, L&T asked its broker to purchase up to 15 per cent of share capital of Mindtree at a price not exceeding INR 980 per share (each share of face value INR 10). This would trigger an open offer by L&T to purchase additional 31 per cent shares of Mindtree. The action of hostile takeover bid by L&T evoked emotional criticism from Mindtree founders. Mindtree efforts to defend itself could not materialize. L&T’s stake crossed 26 per cent on May 16, 2019. After Indian regulator SEBI’s approval, L&T’s open offer to buy shares from Mindtree shareholders commenced on June 17, 2019. The case examines motivation of the acquirer firm particularly when it is a conglomerate, and how a well-performing company became a target for hostile takeover. It looks at vulnerabilities of a target firm, and defensive steps a firm can take to fence itself against such takeover. The case also explores how organizational culture is built in a people-oriented business, namely, digital services, and what role it plays in a merger of two firms.

Complexity academic level

The case is suited for postgraduate students of management, as well as those undergoing executive courses in management.

Supplementary materials

Teaching notes are available for educators only. Please contact your library to gain login details or email to request teaching notes.

Subject code

CSS 11: Strategy.



Disclaimer. This case is written solely for educational purposes and is not intended to represent successful or unsuccessful managerial decision-making. The authors may have disguised names; financial and other recognizable information to protect confidentiality.


Naib, S. and Singh, S. (2019), "Mindtree: hostile takeover bid by Larsen and Toubro", Emerald Emerging Markets Case Studies, Vol. 9 No. 3.



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