Mindtree 3.0
Mindtree founders Krishnakumar Natarajan and Rostow Ravanan met Business Today at JW Mariott in Bengaluru's Vittal Mallya Road, a stone's throw away from the Cafe Coffee Day headquarters. It was early April. The two sounded hopeful. They forwarded five reasons why Mindtree should not give in to the hostile takeover attempt by L&T, a conglomerate with interests in construction, manufacturing, engineering, technology and financial services.
Mindtree grew its revenues 18 per cent in 2018/19, double the industry's expected growth rate during the year. Investments made in the past were starting to show results. "The real benefits will accrue over the next one or two years. If you disturb the equilibrium, the stakeholders will lose out," said Natarajan.
Next, they cited the failure rate of acquisitions. "Every study, across industries, has found that only 20 30 per cent of M&As work. If we go back to people driven IT services type of acquisitions, we are not able to see any history of large IT services acquisitions working," said Natarajan. The third objection was strategic; a bigger size is not relevant in IT services any longer as customers buy based on capability, not capacity.
The founders also appeared agitated at L&T not paying fair value, forget a control premium. "Research says anywhere between 30 per cent and 37 per cent is the control premium that organisations pay when they buy a listed company. Here, you are paying
