German carmaker Daimler AG on Tuesday confirmed that it offloaded its entire stake in Tata Motors. The company has sold 5.34% it held in Tata Motors to various groups of investors through the capital market for Rs 1,860 crore (300 million euro). The news pulled down Tata Motors? shares down by 3.24% on BSE to end at Rs 770.90.
A spokesperson from Tata Motors declined to comment on the development.
Indicating that Tata Motors? share price has risen significantly, especially last year, meaning substantial cash inflow for German maker, Daimler said in a statement, ?The transaction will have a positive effect on Daimler?s EBIT of approximately 265 euro million (equivalent to Rs 1,643 crore) and will be accounted for in the first quarter of 2010.? The association of Daimler and Tata Motors went back to 1954, when the two formed a collaboration to manufacture medium commercial vehicles.
The company further said that the move is also intended on the back of strong position of Daimler to capitalise on the Indian passenger and commercial vehicle markets on its own. ?An equity participation of Daimler in Tata is, therefore, no longer necessary. This has been done in full consultation with Tata. Relations between the two companies are excellent and will not be adversely affected by this sale,? the company said.
As reported by Fe on Monday, the possible stake sale by Daimler has been in the market for a while and the move may be prompted by the German maker to clear the coast for itself as it readies 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 presence in the premium bus and truck segment in the country. 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.