Hero Honda falls on Honda stake sale report

Hero Honda falls on Honda stake sale report
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First Published: Tue, Aug 31 2010. 01 18 PM IST
Updated: Tue, Aug 31 2010. 01 18 PM IST
Mumbai: Shares of Indian motorcycle maker Hero Honda recouped some losses after falling more than 6% on Tuesday on a television report that said Hero and KKR were in talks to buy out Honda Motor’s stake in the joint venture.
TV channel ET NOW said that Hero Group founders, the Munjal family, was in talks to buy out 20% of Honda’s stake, while private equity firm KKR would buy the remaining 6%.
Citing unidentified sources, the report said the Munjals would buy the 20% stake from Honda for Rs7,000 crore ($1.5 billion). Based on the company’s market cap of Rs35,800 crore ($7.5 billion) on Monday, a 20% stake would be worth Rs7,200 crore.
Shares in Hero Honda were trading down 2.5% at Rs1,748.10 at 1.10p.m., after having fallen as much as 6.8% to their lowest level in more than six months.
Hero Honda, 26% owned by Japan’s Honda, is India’s largest motorcycle maker. Honda also has a 100% owned subsidiary that makes motorcycles in India, competing with Hero Honda.
In a response to the report, Honda, Japan’s No. 2 automaker, said the company had no plans to sell its stake in Hero Honda at this time. A spokeman for KKR in India said the firm would not comment on market speculation.
A Hero Group spokesman could not be immediately reached by Reuters for a comment.
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First Published: Tue, Aug 31 2010. 01 18 PM IST
More Topics: Hero Honda | KKR | Automaker | Motorcycles | Stake |