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| Tata Sons buys Daimler's Tata Motors shares worth Rs 300 cr |
| BS Reporter / Mumbai Mar 10, 2010, 00:37 IST |
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Tata Motors’ largest promoter, Tata Sons, bought four million shares of the former from Daimler for Rs 300 crore, thus raising its stake in the commercial and passenger vehicle giant by nearly one per cent.
From the limited data released by the Bombay Stock Exchange (BSE), Daimler AG, owner of the luxury brand, Mercedes, and also the world’s largest truck maker, today completed the sale of its entire stake in Tata Motors, India’s biggest automobile company, for Rs 1,924 crore (¤300 million).
The sale of all the 25.59 million shares held by it was done by the German company to ‘various group of investors’ through the BSE, at an average price of Rs 751.67. Tata Motors was consulted by Daimler before the transaction, according to a statement sent by the latter.
Apart from Tata Sons, which bought the shares at Rs 750, Citigroup Global Markets (Mauritius) Private Ltd bought a little over 4.65 million shares for Rs 350 crore.
The senior management at Tata Motors had clarified yesterday that the company promoters did not wish to participate in buying any shares from Daimler. Despite the positive move by the promoters, Tata Motors’ scrip plunged to an intra-day low of Rs 750 per share on the BSE, a fall of 5.86 per cent from the previous day’s close.
The stock closed 3.24 per cent lower as against yesterday’s closing price.
The promoters’ holding in Tata Motors had shrunk to 38.08 per cent prior to today’s buy-out of 0.83 per cent, well below the majority mark of 51 per cent which would help ward off any hostile takeover bids.
The primary idea behind Daimler selling its four-decade stake in Tata Motors was to raise capital and thereby boost its commercial vehicle plans in India, for which a manufacturing facility at Chennai is under development. Both companies are already competing against each other in the area of luxury cars. While Tata Motors imports and sells the Jaguar range of high-end cars, Daimler retails the Mercedes-Benz range of luxury cars, a majority of which are now made in the country.
“Daimler is today in an excellent position to capitalise on the growth potential of the Indian passenger and commercial vehicle markets and continues to intensify its own activities there. An equity participation of Daimler in Tata is no longer necessary. This has been done in full consultation with Tata Motors,” stated a release from Daimler.
Last year, Daimler Trucks founded its own production company, Daimler India Commercial Vehicles, which is building the new plant in Chennai. Starting in 2012, this will initially produce light, medium and heavy-duty commercial vehicles for the Indian market under a new brand name.
The production of trucks for export to other emerging markets will follow at a later date. Daimler launched its (Mitsubishi) Fuso CV in India at the beginning of this year. The first Fuso vehicle was sold in January.
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