Munjals Might Head The Hero Honda Motors

By By: Vicky.in

Published: Wednesday, December 22, 2010, 15:20 [IST]

After the formal separation between the partners in Hero Honda JV, the topic of discussion now is focused on the boss over of the company. In all speculations it is now clear that Munjals are the most likely to head Hero Honda motors. Reports at the same time indicate Special Purpose Vehicle concept. By annexing the 26%share to be bought from Honda, the Munjals group will hold 50% share in the company despite more investment from PE is expected. Munjals wants to take the over all control to avoid any sort of Take over Code implementation. However, anything will materialize once the structuring and valuation of Special Vehicle Purpose is drafted.

For the estimated value of 26% shares - Rs4500 to Rs6800 crore- Hero Group will contribute Rs1000- Rs1400 crore while the rest will be accrued from PE firms and financial institutions. Those who are in the fore to enter this under PE are Bain Capital, TPG, Warburg Pincus, Apollo, KKR and Carlyle. It all depends when Hero Honda Group discloses the exact value of the Honda"s shares. According to the head of corporate and securities practice in Delhi, the final picture would evolve based on the structuring of SPV concept failing which it may end up with an open offer.

The firm believes that the venture will comprise SPV under the purview of Take over Code. Norm in practice under JV agreement is that a partner buying the shares would not involve Takeover Code for a minimum 20% open offer. In the meanwhile the PE investors are willing to buy the Hero Honda shares at premium rates sensing the rarity of such offers. The firms view the offer as a great opportunity to enter into the global company and to procure huge profit with the anticipated rise in the share prices.

Article Published On: Wednesday, December 22, 2010, 14:10 [IST]

Read more on: #automobile #bikes #hero honda

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