Govt-Suzuki finalise sale of Maruti Udyog

While Suzuki had finally agreed to the government’s demand for a higher control premia several weeks ago—it’s original offer was a little over Rs 200 crore—talks had broken down again with the government insisting that Suzuki even guarantee a minimum price when it offloaded the rest of its stake in the market. (Under the deal, after the rights issue, the government would still be left with 46 per cent share in Maruti, and this was to be sold to the public within a year or so. The government wanted Suzuki to guarantee a certain value for this—so if the market value was lower, Suzuki would have to buy the balance of the government’s share.)

At that time, Suzuki threatened to walk out of the deal as this would have meant it could end up paying close to Rs 3,000 crore for getting control of Maruti—a very exorbitant price, given that General Motors has just signed its takeover of three of Daewoo’s plants for a mere $251 million (the original offer price by GM for all of Daewoo’s plants was $5 billion). Neither Suzuki nor the government are willing to comment on what the final agreement on this has been. After completion of negotiations, the Suzuki team left for Japan.

Earlier, the government had appointed three valuers to value Maruti and the average of their estimates put the worth of Maruti Udyog at Rs 4,400 crore, implying that the government’s 50 per cent stake in the firm was worth Rs 2,200 crore. The premium of the rights issue is to be based on the Rs 4,400 crore valuation arrived at by the three valuers.