Daimler’s stake in Tata motors is up for grabs

It all seems to be a year of buying and selling of stakes, redefining the business strategies, venturing and pulling out diversifying the business for virtually all major automobile manufacturers around the world. The latest to join this list is Daimler AG, German car major, which has announced that it plans to sell its 5.34 percent stake in Indian auto major Tata Motors. It is expecting to raise an estimated Rs 1,950 crores from the proposed sale.

Tata Motors is owned by a host of companies, with only 38.08 per cent stake held by Tata group out of which a significant 27.89 percent is held by Tata Sons and other group companies hold the remaining shares. Tata Sons are not expected to buy-out the shares of Daimler AG according to some sources familiar with the latest developments.

Daimler will be offering 25.6 million shares in a block deal for Rs 737 to Rs 761, which is expected to be completed in the next few days.

At this price level, the price offered by Daimler is at a discount of 4-7 percent to the actual price of the stock, which closed at Rs 796.75 on the BSE. The deal will be routed through Citibank Inc.

Daimler is the world’s largest truck maker and Tata’s Jaguar competed with the Mercedes-Benz. The German truck maker is in its construction phase of a facility at Chennai, which is expected to roll out vehicles from 2012.

Daimler currently own ordinary shares of Tata Motors to the tune of 5.34 percent and 4.71 % on a fully diluted basis.

Since 19 February 2010, share prices of Tata Motors has rose to about 19 per cent, courtesy to the recovering of sales by its latest acquisition, the Land Rover and Jaguar.

It has been observed for quite some time now that Tata Sons is consolidating stake in Tata Motors. Last Saturday, Tata Sons increased its stake by an additional 0.76 percent when it bought 3.69 million shares of Tata Steel.

By the end of the December quarter, Tata Sons which had a 27.13 per cent stake in Tata Motors has increased it to 27.89 per cent.

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