Tata Motors is buying out its partner’s stake in bus joint venture Tata Marcopolo Motors (TMML) for around Rs 100 crore.
“After a successful venture in India and as a consequence of its refreshed business strategy, Marcopolo S.A. has decided to exit the JV and offered to sell its 49 per cent shareholding in the JV to the company,” Tata Motors said in a communication to the bourses on Thursday.
Consequently, the homegrown auto company and Marcopolo SA have entered into a share purchase agreement where the Tatas will purchase the balance 49 per cent shareholding in TMML for a cash consideration of Rs 99.96 crore, it added.
The joint venture had posted a net profit of almost Rs 21 crore on a turnover of Rs 651 crore for the year ended March 31, 2020.
The transaction will see Tata Motors purchasing 8.33 crore shares for a consideration of Rs 12 per share aggregating to Rs 99.96 crore. The acquisition is expected to be completed by February 28 next year.
After this transaction, TMML will become the wholly owned subsidiary of Tata Motors.
Further, all technologies pertaining to existing bus body products manufactured will continue to vest with TMML.
Tata Marcopolo Motors is a 51:49 JV formed in 2006 between Tata Motors and Marcopolo S.A., one of the largest bus and coach manufacturers globally.
The company said since its incorporation, the JV has introduced several innovative design and concepts helping redefine the premium bus body segment in India.
The JV has manufacturing facilities in Dharwad and Lucknow where it builds bus bodies on chassis supplied Tata Motors. These buses are marketed by the company under the “Starbus” and “Starbus Ultra” brands.
Tata Motors said that as part of the transition, Marcopolo S.A. will continue to license the “Marcopolo” trademarks to TMML for a minimum of three years with a non-compete provision.
The company, Marcopolo S.A. and TMML, intend to maintain an open channel for future collaboration opportunities around bus body designs and technical consulting services, Tata Motors said.
Shares of Tata Motors on Thursday ended lower 0.47 per cent at Rs 181.65 in the BSE, resulting in a market cap of over Rs 51,000 crore. Since its 52 week low of Rs 63.60 hit on March, the shares have risen almost 186 per cent.