Tata Motors to sell non-core defence and aerospace assets to Tata Advanced Systems
The company aims to reduce net debt through the asset monetization.
Tata Motors Limited (TML) announced sale of defence and aerospace assets in a bid to reduce debt and reduce “non-core” assets. The sale will be to group company Tata Advanced Systems Limited (TAL), which is owned by Tata Sons, the promoter entity of TML.
Firstly, the defence business will be sold to TAL for an upfront consideration of Rs100cr. Additionally, a deferred consideration of 3% of revenue generated from certain defence projects from up to 15 years starting FY20 subject to a maximum of Rs1,750cr.
Secondly, TML will sell stake in its wholly owned subsidiary, TAL Manufacturing Solutions Limited (TMSL) at an Enterprise Value (EV) of Rs625cr. As a condition precedent, TML will acquire the non-aerospace business from TMSL at a value of Rs10 lakh.
Guenter Butsheck, managing director and chief executive officer, TML said, “On our transition to a full range combat vehicle player, we realised that our current portfolio is small and we need scale to unlock its true potential. We believe Tata Advanced Systems will be better equipped to execute larger and more complex projects and be more globally competitive as part of the larger Tata Group. Also, TAL Aerospace Solutions is a non-core business to Tata Motors. We have been working on charting our next phase of growth and would like to use the opportunity of consolidation at Group level to monetize our investment in this area”, added Guenter.
Tata Motors Ltd ended at Rs335.70 up by Rs2.25 or 0.67% from its previous closing of Rs333.45 on the BSE. The scrip opened at Rs335.70 and touched a high and low of Rs335.70 and Rs335.70 respectively. A total of 49,952 (NSE+BSE) shares were traded on the counter. The current market cap of the company is Rs1,05,802.89cr.
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