InvestorQ : Is the Tata group willing to buy out the stake of Shapoorji Pallonji group?
diksha shah made post

Is the Tata group willing to buy out the stake of Shapoorji Pallonji group?

Neelam Naik answered.
8 months ago

If the statements are anything to go by, we could finally see the standoff between the two most powerful Parsi families in India coming to an amiable end. Tatas have offered to buy out Pallonji’s 18.5% stake in Tata Sons and finally, the Mistry group is also willing to sell.

The SP Group hinted that it would prefer to exit from Tata Sons considering the worsening relations between the two groups. It would bring to close a 70-year association. Relations had soured post the removal of Cyrus Mistry from the chairmanship of Tata Sons in Oct-26.

In the last four years, the allegations have flown fast and thin. While the Tatas have accused the Mistry group of using indirect means to gain control, the Mistry group has blamed Ratan Tata for the huge losses in some of its projects and the over-reliance on TCS.

The latest thaw in their relationship happened when the Tatas went to the Supreme Court to block the pledge of Tata Sons shares by the Mistry family. The Mistry family stake in Tata Sons is almost worth $19 billion and this value is largely accounted for by TCS.

Pallonji group wanted to pledge its holdings in Tata Sons to resolve the liquidity crunch it was facing in its core business on account of COVID-19. Tatas had blocked the proposed pledge saying it was tantamount to a sale and hence Tatas should have first right.

Now Shapoorji Pallonji has expressed interest in exit their stake in Tata Sons. Tatas have made an offer to buy out their stake but it is not clear how the Tatas will fund the $19 billion buyout. The final decision is likely to be taken after the SC ruling on October 28.