Tata Motors, India’s largest vehicles maker is selling about 20 percent stake in its equipment and services unit to Japan’s Hitachi Construction Machinery Co for roughly $220 million, a source with direct knowledge of the deal said.
Telco Construction Equipment Company (Telcon), in which Tata Motors holds 60 percent stake and Hitachi 40 percent, supplies a wide range of construction equipment such as excavators, mining shovels and dumpers to the construction and earth-moving sector.
Hitachi Construction is Japan’s No. 2 maker of earth-moving equipment. Standard Chartered is advising Tata Motors on the deal.
We have stated our intent to explore options through divestments. As and when these are concluded, we will make the required announcements, Tata Motors Chief Financial Officer C. Ramakrishnan told Reuters when asked about the stake sale.
Last year the company sold shares worth $150 million in group firm Tata Steel and is also looking at selling a stake in its financing unit Tata Motors Finance Ltd.
Earlier this week the company, which had a debt of $5.1 billion as on December-end, said it was offering an early conversion to its foreign currency bond holders to help reduce the debt on its balance sheet.
Shares in Tata Motors fell 1.87 percent to 725.25 rupees while the main index closed up 0.6 percent.