Is Tata Motors Buying Swaraj Mazda?

[RSM]

India's largest carmaker Tata Motors is considering buying a stake in truck and bus manufacturer Swaraj Mazda, a report said on Tuesday.

The auto giant is looking at buying the 17 per cent stake from private equity firm Actis, according to the Economic Times business daily, citing people familiar with the matter.

Actis owns a 7.7 per cent direct stake in Swaraj and 9.3 per cent through its parent CDC.

A spokesperson for Tata Motors said the report was "purely speculative" while Actis' India head, JM Trivedi, refused to comment, the Economic Times reported on its website.

Swaraj Mazda makes buses, trucks and ambulances for the Indian market and is majority owned by Japan-based Sumitomo Corporation, which raised its shareholding to 53.5 per cent this year.

Actis is a private equity firm focused on emerging markets, with more than $4.8 billion dollars under management, according to its website.

"The Tatas might eventually eye buying out Sumitomo's stake in Swaraj," a local auto analyst said on condition of anonymity.

Tata Motors has a 63 per cent market share in India's commercial vehicle sector, which could rise to about 65 per cent if it got a controlling stake in Swaraj.

Swaraj Mazda's share in the vehicles market fell to 1.8 per cent in the April-October period this year, from 2.2 per cent for the same period a year earlier.

Swaraj Mazda shares rose as much as 9.3 per cent or 24.65 rupees during the day to 289.9 at the Mumbai stock exchange, before retracing on profit-taking to 273.05 rupees, up 7.8 rupees or 2.94 per cent.

Source - Economictimes

 

[Neil.Bhujbal]

They bought the jaguar and land rover,then it was recession & TATA was running in loss. How could have they recovered so fast to go & buy another brand ?

 

[RSM]

They will take money from Public through IPO, FPO or some other method.

 

[Neil.Bhujbal]

I thought IPO/FPO is only when someone's to start a new thing. Swaraj Mazda's shares must already be out in public right ? So how can TATA raise public money to buy the already existing shares ? (or does that happen ? Sorry don't know much)

 

[Zinam]

But they can raise shares based on a JV with swaraj! :)

 

[Neil.Bhujbal]

Ah.. got it

IOP - Public money for starting a new thing

FOP - Public money for buying shares which already exist in market.

But they can raise shares based on a JV with swaraj! :)

You mean joint venture ?

But still,i dont think TATA would buy the Swaraj Mazda at this moment.

Or maybe they can

 

[RSM]

Bit off topic -
IOP - Initial Pablic Offer - Yes this happens when owner of the company floats their shares in market for investor to raise money.
FPO - Follow on Public Offer - When the company raises capital after an IPO has already been made.

Both way owner shed their shares and raise capitol.

 

[RSM]

Tata Motors, India’s largest marker of commercial vehicles, is negotiating to acquire Japanese conglomerate Sumitomo’s 53.5% stake in Swaraj Mazda as it attempts to strengthen its position in the light commercial vehicle or LCV market which is all set to see the entry of new players such as GM and its Chinese partner SAIC and a joint venture between Ashok Leyland and Nissan.

An announcement may happen early next year, a person close to the development said, requesting anonymity. If the deal is consummated, Tata Motors will have to make an offer to the minority shareholders of Swaraj Mazda at the same price paid to Sumitomo, as required by rules governing company acquisitions in India.

Source - Economictimes

 

[Crazy cat]

Tata couldn't get through the Mini-van segment, which is dominated by Mazda and Traveller. So, they could have done this.

 

[RSM]

Bit off-topic, delhi govt. has fine Tata - 4 crores - on their new buses.

 

[cooldhaya]

Why is that??