Billionaire Pallonji Mistry has sought to swap his stake in Tata Sons Pvt., which his group values at $24 billion, for shares in the listed companies of India’s biggest conglomerate as the former partners move to sever ties.
The Shapoorji Pallonji Group told the Suprem Court it estimates its 18.4% stake in the Tata Group’s main holding company to be worth more than 1.75 trillion rupees ($23.5 billion) including valuation of the brand. It’s seeking pro-rata shares in listed Tata entities, cash, or any marketable instrument in lieu.
This “largely non-cash settlement would ease pressure on Tata to raise large quantum of debt,” SP Group said in a statement Thursday. “Disputes over valuation can be eliminated by doing a pro-rata split of listed assets and pro-rata share of the brand.”
The offer comes nearly a month after the Mistrys announced their intention to sever a 70-year relationship with the coffee-to-cars Tata empire. The family has been locked in a bitter courtroom battle with the $113 billion conglomerate as it seeks funds for its own cash-strapped businesses.
A representative for Tata Sons declined to comment.
Bulk of this $24 billion would probably come from Tata Consultancy Services Ltd., where SP Group estimates its shareholding translates to 13.2% or about 1.35 trillion rupees at current values.
“It looks unlikely that Tatas will readily agree to this proposal,” said Shriram Subramanian, founder of proxy advisory firm InGovern Research Services. Valuation of unlisted firms and the Tata brand are still unresolved, he said.
Also, by splitting the shareholding in listed companies, Tata Sons’s equity in those firms will fall and in some cases may “reduce considerably leaving the listed companies susceptible to hostile takeovers,” Subramanian said.
SP Group said in its statement that the settlement would leave the Tatas with more than a 51% stake in TCS, India’s biggest software services exporter and the group’s cash cow.
