JOIN USSwedish auto major Volvo is likely to sell further stake in Eicher Motors. Volvo is likely to sell around 10.1 lakh shares in Eicher Motors in the price range of Rs 17,190-Rs 18,190 per share, sources told Deccan Herald.
Volvo is likely to raise around $286 million from the stake sale and Citibank is likely to be the banker for the deal, sources added. Shares of Eicher Motors ended marginally higher, up 0.3 per cent or by Rs 54.75 at Rs 18,199.95 per share with volumes of 89.795 shares on NSE. When contacted, a Volvo spokesperson told Deccan Herald in an emailed response,”We do not speculate on rumours like this.”
Second sale in 3 months
This will be the second stake sale by Volvo in Eicher Motors in around three months. Earlier in March, Volvo had sold approximately 4.7 per cent stake (12.7 lakh shares) in Eicher for nearly 2.5 billion Swedish krona through a bulk deal on the Indian bourses. Citigroup Global Markets Mauritius had bought over one per cent stake in the company by buying shares worth over Rs 619 crore in the deal.
Volvo Group and Eicher Motors had formed a 50:50 joint venture in July 2008 called VE Commercial Vehicles (VECV), to manufacture commercial vehicles. VECV comprises of five business verticals — Eicher Trucks and Buses, Volvo Trucks India, Eicher Engineering Components, Eicher Engineering Solutions, and VE Powertrain. It is headquartered in New Delhi. VECV covers the complete range of Eicher’s commercial vehicles, components, and engineering design businesses as well as the sales and distribution of Volvo trucks. VECV had registered total sales of 4,035 units in May 2015 as against 3,075 units in May 2014.
As part of the joint venture agreement with Eicher for the commercial vehicle business, Volvo had acquired 22.75 lakh shares of Eicher Motors representing 8.4 per cent of the equity capital. Volvo’s stake in Eicher Motors stood at 4.7 per cent post the March stake sale. Eicher Motors is a leading player in the Indian automotive industry and is active in two areas — commercial vehicles and motorbikes. In parallel with its joint venture with the Volvo Group, EML owns the renowned Royal Enfield motorbike brand.
At the time of the March stake sales, the companies had said that the divestment would have no bearing on VE Commercial Vehicles (VECV), the commercial vehicle joint venture of the companies, which would continue to be governed as an equal partnership venture.
The shareholding pattern and governance framework of VECV remains unchanged, EML had said at that time.
Also at that time, a Volvo spokesperson had said in an email response that the company no longer needed to hold Eicher Motor shares for accounting purposes.