THREAD on how one of INDIA's biggest CONGLOMERATE LARSEN & TOUBRO (L&T) was a target of multiple takeover and how A M NAIK finally saved it

This story started in the year 1987 when MANU CHHABRIA a
DUBAI based investor who had previously taken over
DUNLOP,FALCON TYRES

SHAW WALLACE and many more.He was known for his reckless management style. So he was a nightmare for companies run by professional management.

So when MANU CHHABRIA bough a 1% stake in L&T,the management realised that he is aiming for a takeover. So chairman of L&T, N M DESAI

approached DHIRUBAI AMBANI as a WHITE KNIGHT to save L&T from takeover. As expected AMBANI bought around 12.4 % from the market but AMBANI was not white knight.AMBANI had a different plan which unfolded later.

AMBANI continued to buy shares and increased his holding to 18.5 by

1989 by spending 190 crores,which was a big sum then. AMBANI had full support of congress government then.

Then started the next phase,AMBANI took board seat for himself as well as MUKESH AMBANI and ANIL AMBANI and ousted chairman NM DESAI from L&T

The threat of MANU CHHABRIA

was gone but new challenges arrived for L&T. AMBANI had other plans which they started executing. L&T was executing RELIANCE petrochemical complex as well had substantial cash flows. So L&T was made to give a suppliers credit of 570 crore to RELIANCE. Things did not stop there.

L&T also bought shares worth 76 crore rupees of RELIANCE from entities close to RELIANCE.

But this ended soon. In 1989 the Congress, led by the then PM RAJIV GANDHI lost power to V P Singh.

Prime Minister Singh was not friend of AMBANI's or any big business, for that matter.Singh's tenure saw the revival of the raid raj.The government immediately asked state-owned Life Insurance Corporation, the dominant shareholder, to make sure that the AMBANI'S were out of L&T.

AMBANI was forced to resign from the board and former State Bank of India chairman D N Ghosh replaced him.AMBANI's were also fighting a battle with NUSLI WADIA of BOMBAY DYEING.

UNder GHOSH L&T immediately withdrew the supplier's credit to RELIANCE and started off-loading

RIL shares in the market. Though MUKESH AMBANI and ANIL AMBANI were still on L&T's board, they soon realised that with a hostile government at the Centre, it was impossible to control the company cause majority shareholding was still with government-owned institution

But then came another twist. V P SINGH's minority government soon collapsed and was replaced in 1990 by CHANDRA SEKHER, who had closer ties with AMBANI's. GHOSH was asked to resign.The Supreme Court ruled in RELIANCE favour. But Economy was also in ruins as a result

of a drain on the country reserves. With the elections of 1991 bringing the Congress back to power in a minority government under PV NARSIMHA RAO the AMBANI's tried to make a comeback.

n June 1991, the AMBANI's had enough shares and proxies to vote him back as

chairman and MUKESH as the managing director.But following pressure from Opposition, PM Rao decided to stay away from the battle.Orders from the then finance minister MANMOHAN SINGH, LIC sought an adjournment of the Extraordinary General Meeting in August 1991 which was to vote

on bringing AMBANI's back to L&T.

After that, the Ambanis stayed on as passive investors in L&T for more than a decade.But they had a surprise in store.

The surprise came in november 2001, the AMBANI's sold their remaining 10.05 per cent stake in L&T to KUMAR MANGALAM .

BIRLA's GRASIM.
GRASIM was directly competing with L&T in the cement business, which is why it wanted to take over the company

But one person was grossly underestimated, this time it was not NM DESAI but ANIL MANIBHAI NAIK. Mr NAIK faced BIRLA's head on.Naik fought BIRLAs entry

AM NAIK united all his employees together and created L&T EMPLOYEES WELFARE FOUNDATION with a target of buying shares of L&T.NAIK made representations to everyone from the PM to LIC to let L&T retain its professional management. After months of negotiations, Birla exited L&T by

selling its stake to the EMPLOYEES FOUNDATION run by L&Ts employees in June 2003. In return, Birlas received L&T's cement division and named it ULTRATECH. It was a win-win deal for both the company.L&T was finally in the hands of its own employees. the market value of L&T has

gone up 22 times from Rs 6,000 crore to Rs 1,32,000 crore now, with its employees owning substantial part of the company. It is impossible for anyone to make a hostile takeover attempt on it.NAIK made it one the top and best run company in India with employees skin in the game.

But once which was a prey(L&T) of predators(RAIDER's) become a PREDATOR itself.
L&T recently did a hostile takeover of MINDTREE.

The info mentioned have been taken from multiple sources online.

If you find the THREAD interesting.
Do retweet

@stocktalk_in @FinMedium @fin91in @SmartSyncServ \\
tagging for reach.
Thank you

Another THREAD on how to exit a trade. https://twitter.com/AshrafZaman3/status/1296034214542888960?s=19