German carmaker Daimler AG is believed to be looking to exit Tata Motors by selling its entire stake in the Indian company. Daimler, which holds 5.34% stake in Tata Motors as on December 31, 2009, is reportedly selling the shares (2.55 crore) at a 4% to 7% discount to the scrip?s closing price of Rs 796.75 on Monday on the BSE. At current market prices, the Daimler stake is worth Rs 2,031.72 crore.

Details about the buyer are not known. However, Citigroup is handling the share sale that is expected to complete on Tuesday under block deal.

While Tata Motors spokesperson did not comment on the issue, a Daimler spokesperson, in an email reply, told FE, ?We are not commenting on these rumours.?

?The stake hasn?t taken Daimler anywhere in the last 40 years or so, and having cash these days is a luxury,? Arndt Ellinghorst, an analyst with Credit Suisse in London, said of Daimler?s holding in Tata Motors. Daimler, busy with other joint ventures, may be looking to ?streamline? its portfolio, he said.

Promoters hold 43.40% in Tata Motors, and the remaining is held by the public. The possible stake sale by Daimler has been in the market for a while now. Daimler?s move is seen as an attempt to streamline its portfolio and comes at a time when the German vehicle-maker is readying to compete against Tata Motors in the mass market commercial vehicle segment. The company is busy setting up a truck plant in Chennai, which is expected to be ready by 2012. Further, the Daimler group also competes against Tata Motors? luxury passenger car brands Jaguar Land Rover through its co-brand Mercedes-Benz. Mercedes-Benz also has a presence in the premium bus and truck segment in India.

The association of Daimler and Tata Motors goes back to 1954 when the two formed a collaboration to manufacture medium commercial vehicles.

The Indian company hired Carl-Peter Forster, the former head of General Motors Co?s European division, as CEO to help manage global operations after purchasing Jaguar Land Rover from Ford Motor Co in 2008 for $2.5 billion.

During the quarter ended December 31, 2009, Tata Motors with JLR has posted a net profit of Rs 650.26 crore, boosted by a profit of Rs 416.95 crore or ?55 million from its luxury vehicles arm JLR.

This is against a consolidated loss of Rs 2,598.83 crore in the corresponding quarter last year.