Thursday, December 16, 2010

Honda formally decides to sell stake in Hero Honda JV

Japan's Honda Motor has formally decided to sell its stake in Indian partner, Hero Group. The board, including Analjit Singh and M Damodaran, is currently finalising the termination of the joint venture. However, sources inform that the decision on finalising private equity players has been deferred.

It is learnt that Hero will acquire 26% stake from Honda for an estimated USD 1-1.2 billion. Sources also add that Hero Honda is likely to pay a royalty of Rs 2,300-2,400 crore over three to four years to Honda.

CNBC-TV18 reports suggested that investors have not been in favour of Honda Motor selling its share to Munjals-led group on a discounted price, as they fear this well lead to Hero having to pay more in royalty to the Japanese automobile major.

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