Opinion | L&T's Mindtree hostile takeover bid & the idea of DVRs in India
Shares with differential voting rights, or DVRs, serve as a defence mechanism against hostile takeover bids but?outside of the startup world?they still do not make much sense in Corporate India
- The framing of the discussion around the Bengaluru-based IT services company is, of course, slightly flawed.
- Nor can the engineering major be seen as a typical predator in the mould of the fictional Gordon Gecko, or the more real Carl Icahn (whose repeated, but unsuccessful efforts to buy Clorox are the byword in hostility), or even India's original corporate raider, the late Manu Chhabria, who in the 1980s cast a malevolent eye on companies such as Shalimar Paints, Mangalore Chemicals and Fertilisers, and Gammon India.
- It is a professionally-run company, not a promoter-led one, and it already has the required pedigree in the IT business with its two companies L&T Infotech Ltd and L&T Technology Services Ltd .
- Similarly, Facebook Inc. has issued Class A shares (listed through the initial public offer and held by public shareholders), which carry one voting right each, while its unlisted Class B shares, which carry 10 votes each, are held by Mark Zuckerberg and affiliates, and have no sunset clause, a contentious issue in such a structure.
- The problem, though, is that such a structure may not be particularly relevant in India, since the Mindtree situation isn't a typical case .