BENGALURU: Diversified conglomerate Larsen & Toubro (L&T) is set to launch a hostile bid to acquire mid-tier IT services company Mindtree , possibly as early as Monday evening. It will buy out Coffee Day founder and Mindtree 's largest shareholder, V G Siddhartha, and proceed with an open offer to public shareholders, spending as much as Rs 7,000 crore (or $1 billion), for a controlling interest, people directly aware of the matter have told TOI .This will be the first-ever hostile takeover move in India's technology industry, and a rare, full-blown tussle for a publicly-traded company in recent history. The four remaining founders of the two-decade-old, Bengaluru-headquartered Mindtree - Krishnakumar Natarajan, Subroto Bagchi, N S Parthasarathy and current CEO Rostow Ravanan - together own 13.3% of Mindtree and are resisting the L&T bid.TOI first reported that Siddhartha's exit could trigger M&A jitters for Mindtree in its December 17 edition. India Inc has seen very few successful hostile takeovers - among the notable exceptions are N Srinivasan-led India Cements' acquisition of Raasi Cement in 1998 and the late Manu Chhabria's ouster of the incumbent management to take control of Shaw Wallace in the late 1980s.The A M Naik-helmed L&T is buying Siddhartha's nearly 21% stake for over Rs 3,000 crore, at Rs 981 a share, which will make it Mindtree's largest shareholder. Following this, L&T will trigger an open offer for another 26% from public shareholders. KPMG Corporate Finance is the lead transaction adviser, while Citigroup and Axis Capital will manage the open offer process.The founders have spoken to multiple private equity investors — KKR, Baring Asia and ChrysCapital, among others — in the past two months to stitch up a counter-bid. But these talks have floundered for at least three reasons: the unwillingness of the founders to share much control; most private equity investors couldn’t match what L&T was offering; and the prospect of waging an expensive takeover battle against the almost Rs 120,000 crore-turnover conglomerate.L&T declined to respond when contacted, while Siddhartha could not be reached for immediate comment.L&T has eyed Mindtree for some time as it scouted for M&As in a consolidating sector. The nearly $1-billion revenue and fast-growing digital revenue — signalling strong adoption of newer technologies like AI, cloud, big data and analytics by clients — makes Mindtree a particularly attractive target.Siddhartha, the earliest investor to back the founders, first talked about exit plans around 10 months ago, soon after he left the company’s board. He explored various options and even sought the support of founders to monetise the holding. Siddhartha, who is incidentally former Karnataka chief minister S M Krishna’s son-in-law, wanted to pare his ballooning debt, more so as liquidity pressures heightened following the NBFC crisis late last year.In the run-up to the dealmaking by L&T, the founders strongly believed — and continue to do so — that hostile takeovers don’t work in the IT services sector. Differing cultures and value systems tend to unsettle clients and employees, and have led to integration challenges in multiple big post-M&A situations in the sector, according to them.L&T stepped into active discussions about eight months ago and had emerged a frontrunner to buy out Siddhartha by November end. Siddhartha met with L&T chairman A M Naik and both agreed on the broad contours of a deal. Naik wanted Siddhartha to bring along the founders and promised a higher price if he managed to get their nod. L&T chief executive S N Subrahmanyan met with Mindtree founders and management, but couldn’t broker a breakthrough.The founders continued to believe that Siddhartha wouldn’t sell to L&T – until Mindtree’s independent directors goaded them in mid-January to start looking for a counter-offer if they were serious about keeping control. As the prospect of L&T going hostile became clear, the founders approached private equity groups and were willing to sacrifice the stiff conditions they had earlier placed before any incoming investor.“It’s likely that institutional investors who’ve held large blocks of shares for many years will favourably view any L&T offer at a premium to the current price,” said Shriram Subramanian, founder and MD of InGovern Research Services, a leading corporate governance advisory firm. “However, the resistance of the founders could split other public shareholders and there could be a scenario where two sets of shareholders seek control of the company,” he added.