JOIN USSwedish truck manufacturer Volvo is likely to sell around 4 per cent stake in Eicher Motors for $300 million, the makers of Royal Enfield motorcycles as well as commercial vehicles.
The base deal of offering will be $250 million with an upsize option of up to $50 million and the deal is likely to be concluded on Wednesday itself, sources told Deccan Herald.
The indicative price range for the offering is likely to be Rs 14,636-Rs 15,907 and the discount range is likely to be 0-8 per cent to the closing price as of March 3. Eicher Motors had closed with a loss of 3.78 per cent at Rs 15,891 with traded volumes of 0.13 lakh shares on BSE. The market capitalisation of Eicher Motors as per the closing price on Tuesday stood at Rs 43,077 crore and the 8.4 per cent will be valued at around Rs 3,620 crore.
Volvo Group and Eicher Motors had formed a 50:50 joint venture in July 2008, VE Commercial Vehicles (VECV), to manufacture commercial vehicles. VECV comprises of five business verticals – Eicher Trucks and Buses, Volvo Trucks India, Eicher Engineering Components and VE Powertrain and is headquartered in New Delhi. VECV includes the complete range of Eicher’s commercial vehicles, components and engineering design businesses as well as the sales and distribution of Volvo trucks.
Volvo had bought an 8.4 per cent stake in Eicher Motors as part of the deal to form the joint venture. VECV had sales of 678 units in February 2015 (including exports) as compared with a612 units an year ago.
Brokerage firm Sharekhan believes that the stake sale is unlikely to have an impact on the operations of the joint venture.
“The stake sale will not impact the operations at VECV. The stake sale by a large investor would impact the stock negatively,” Sharekhan said.