Mindtree To Consider Buyback As Largest Shareholder Looks To Sell Stake

Mindtree Ltd. will consider a buyback amid reports that L&T Infotech Ltd. is in talks to acquire stake from its largest shareholder VG Siddhartha and his Coffee Day Group.

The board of the software services provider will consider a share repurchase at its March 20 meeting, according to an exchange filing. Mindtree had cash worth Rs 162 crore, as of December 2018, according to its filings. It also had investments worth Rs 811 crore which can be used for the potential buyback.

L&T group is looking to buy Coffee Day Group's 20.4 percent stake in Mindtree, Mint and Economic Times have reported. Siddhartha is said to be trying to sell stake to pare debt. L&T and Siddhartha have yet to respond to BloombergQuint's queries sent earlier.

“The board’s decision to consider a share buyback right now is curious,” said Urmil Shah, research analyst at IDBI Capital. “A buyback and a likely open offer (if L&T is successful in taking over the company) at the same time, will be a first.”

VG Siddhartha may choose to participate in the share buyback, said Madhu Babu, I.T. Analyst at Centrum Broking.

Mindtree will join the list of technology companies that announced a share buyback or a dividend to reward their shareholders post the December quarter earnings.

The company had announced an interim dividend of Rs 3 per share post its third quarter results.