Tata Sons Ltd, the holding company of Tata conglomerate, has proposed to buy out Tata Steel’s stake in Tata Motors on or after June 23. The holding company headed by N Chandrasekaran will buy about 83.6 million shares in Tata Motors at or around the prevailing price of the stock on the date of the planned acquisition, it said in a filing. The purchase is likely to cost around Rs 3,800 crore as the Tata Motors share closed at Rs 455.50 on the BSE on Friday.
Tata Sons cited “restructuring of investment portfolio” as the reason for the planned deal. Analysts said the stake purchase could be to bring down cross holdings in the Tata group. Though Tata Sons is the main holding company of the group, various listed entities hold stakes in other group companies.
Tata Sons holds 28.71 per cent stake in Tata Motors at the end of March, while Tata Steel owned 2.9 per cent in the vehicle maker. Tata Sons owned 29.75 per cent of Tata Steel at the end of March, while Tata Motors owned a 0.46 per cent stake in the steelmaker, according to stock exchange data.
The value of Tata Sons holding in the cash cow of the group, TCS, is worth around Rs 346,000 crore as the former holds 73.3 per cent stake in the largest tech company in the country. Analysts don’t rule out further stake purchases by Tata Sons in various group companies to reduce the cross holdings. The recent buyback by TCS has made Tata Sons richer. Tata Sons received Rs 10,278 crore from the share buyback as per the regulatory filings.