Tata rejects Mistry family’s share swap offer
The rejection of Mistry family’s share swap offer comes close on the heels of a $13 billion valuation gap of the 18.4% stake in Tata Sons owned by it
PremiumThe Tata group on Thursday rejected Mistry family’s offer to swap its 18.4% stake in Tata Sons Limited for equitable stakes in various group companies. In his submission before the apex court, senior counsel Harish Salve appearing for the Tata’s termed the Mistry settlement plan untenable since it pertained to grievances pertaining to charges of minority oppression alleged by the Mistrys. “It’s nonsense. This kind of relief cannot be granted," Tata’s lawyer Harish Salve said during a hearing before India’s Supreme Court on Thursday. “I’m opposing it," he said. Salve further told the court that the Tata group was principally against the Mistry separation plan since it was based on minority oppression and a buyout of the stake by Tata group may become tenable only if the family wins the ongoing case.
“At best if they win their case on oppression then the court can ask the majority to buy out at fair value" Salve told the apex court when asked by Chief Justice SA Bobde. “ Pallonji group has proposed dividing up the assets of Tata sons so that 18% share in all assets and they are asking separation as a “relief" as a matter of right because they are oppressed" salve said.
The rejection of Mistry family’s share swap offer comes close on the heels of a $13 billion valuation gap of the 18.4% stake in Tata Sons owned by it. On Tuesday, Tata group had informed the court that it was not in agreement with Mistry's family and claimed a valuation of over ₹1.75 lakh crore of its shareholding in Tata "As per our calculations, the Pallonji Group shareholding in Tata Sons is worth not more than ₹70,000 crore to ₹80,000 crore, Salve had told the court.
In October, Tata Sons indicated that it may be open to a planned court monitored separation with the Mistrys but was yet to receive a formal request or proposal from the SP group on this matter. Subsequently, the Mistry family controlled Shapoorji Pallonji (SP) group, filed a scheme of separation in Supreme Court as part of additional relief in the minority shareholders' oppression case, proposing to swap its entire holding in the group holding company for equivalent shares in listed entities of Tata group and along with a pro-rata share of Tata brand value (adjusted for net debt against) payable by cash or listed securities. For unlisted companies of Tata group, the SP group has sought independent valuation also payable in cash and or in listed securities. Announcing its decision to separate from Tata Sons, Mistry family promoted Shapoorji Pallonji ( SP) group raised concerns on alleged corporate governance violations in the Tata Group, in which it remains the single largest shareholder of Tata Sons, the group holding company. It said that it was compelled to seek separation under duress as continuing litigation in the matter would have a serious adverse impact on the SP group’s finances and those whose livelihoods were tied to it.
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