Mumbai-based Larsen & Toubro’s (L&T) plan to buy out Bengaluru-headquartered Mindtree has left many asking: Why is an 80-year-old engineering and construction company so interested in a mid-sized IT outsourcing firm that it is willing to risk a hostile takeover bid worth close to Rs10,700 crore ($1.6 billion)?
The answer, according to industry analysts, is straightforward: self-preservation.
“L&T’s five-year strategy for financial years 2016 to 2021 involves growing of their services business, apart from non-core divestment,” said Lavina Quadros, equity analyst at Jefferies India. Mindtree acquisition is in line with the management’s vision to increase the portion of services in its overall portfolio, in order to offset the volatility in major verticals such as banking and financials, Quadros added.
Mumbai-based Larsen & Toubro’s (L&T) plan to buy out Bengaluru-headquartered Mindtree has left many asking: Why is an 80-year-old engineering and construction company so interested in a mid-sized IT outsourcing firm that it is willing to risk a hostile takeover bid worth close to Rs10,700 crore ($1.6 billion)?
The answer, according to industry analysts, is straightforward: self-preservation.
“L&T’s five-year strategy for financial years 2016 to 2021 involves growing of their services business, apart from non-core divestment,” said Lavina Quadros, equity analyst at Jefferies India. Mindtree acquisition is in line with the management’s vision to increase the portion of services in its overall portfolio, in order to offset the volatility in major verticals such as banking and financials, Quadros added.
Mumbai-based Larsen & Toubro’s (L&T) plan to buy out Bengaluru-headquartered Mindtree has left many asking: Why is an 80-year-old engineering and construction company so interested in a mid-sized IT outsourcing firm that it is willing to risk a hostile takeover bid worth close to Rs10,700 crore ($1.6 billion)?
The answer, according to industry analysts, is straightforward: self-preservation.
“L&T’s five-year strategy for financial years 2016 to 2021 involves growing of their services business, apart from non-core divestment,” said Lavina Quadros, equity analyst at Jefferies India. Mindtree acquisition is in line with the management’s vision to increase the portion of services in its overall portfolio, in order to offset the volatility in major verticals such as banking and financials, Quadros added.
