InvestorQ : Has the Pallonji group sent a formal proposal to exit the Tata Sons shareholding?
diksha shah made post

Has the Pallonji group sent a formal proposal to exit the Tata Sons shareholding?

Niti Shenoi answered.
9 months ago

It looks like there has been no formal proposal from the Shapoorji Pallonji group that is waiting for a confirmation on valuation from Tata Sons. The Mistry is unlikely to convey its intent unless Tatas convey their indicative valuation of the stake to the Mistry family.

Even the Tata group officials have confirmed that the Shapoorji Pallonji group had not sent any formal proposal to the Tatas to divest ownership in Tata Sons. IT may be recollected that the SP group currently owns 18.5% in Tata Sons, and is the largest single shareholder.

The issue of sale of stake started when the Mistry group wanted to pledge part of their stake in Tata Sons to muster close to $1 billion to fund the losses created by COVID-19. Tatas had objected as it went contrary to their Articles of Association of Tata Sons.

The matter went to the Supreme Court but the SC ruled that the Tatas were justified in objecting to the pledge since in the event of a default the pledge would tantamount to transfer of shares and go against the grain of the AOA.

Post this ruling, the SP group had indicated their desire to opt out of Tata Sons altogether. They had cited worsening relations making it impossible for the stake to continue. However, there is no confirmation on how the SP stake will be valued.

The SP group is looking at valuations close to Rs.180,000 crore but the Tatas have been non-committal. Now, it looks like SP group may look for a premium due to the digital properties that they are foregoing due to the sale. Expert eventually see no stake sale but a negotiated settlement.