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20 Sep 2017

Tata Sons buys Tata Motors' shares, eyes online grocery retail

Tata Sons is realigning its priorities

Tata Sons purchased 1.7% shares of Tata Motors worth Rs. 2,000 crore at a premium of 4% over Monday's closing price.

ET got hold of a term sheet, which pointed out that the firm intended to buy these shares at Rs. 421.56 per share price, over Monday's closing price of Rs. 405.35. The sellers' names are not yet known.

Here's more about it.

In context

Tata Sons is realigning its priorities
Here's what happened

Tata Motors

Here's what happened

As of June 30, 2017, Tata Sons owned 31.6% stake in Tata Motors, Foreign institutional investors (FIIs) held 23.49% and domestic mutual funds had 5.32% stake.

According to an official, privy to the matter, this was launched on Monday morning (18.09.17) via reverse book building method. Citi is acting as the advisor book runner.


What happened in the past?

It's the second transaction made in Tata Motors by Tata Sons in the past 12 months. Just before the automaker's shareholders meeting in December last year, the group bought 1.02% stake for Rs. 2,430 crore.

It was also the year when Cyrus Mistry was ousted from the board following a special general body meeting. Tata Motor's shares rallied up over 5% after this stake buying.

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Tata Group enters online grocery business


Tata Group enters online grocery business

Meanwhile, Tata Group is making its entry into the online grocery business under Starquik brand. This venture will compete with Amazon and BigBasket for market share in a rapidly growing online grocery segment.

The group will launch a pilot within next two months as an online channel for Trent Hypermarket, an equal JV of Tata and British retailer Tesco, said people in the know.


How will it go down?

Star Daily, Star Market, and Star Hyper are run by this JV and it has around 42 stores. Trent will shut down the smaller format i.e. Star Daily to minimize costs in rentals and will serve the same catchment areas online.

As FDIs are not allowed in multi-brand non-food products offline/online, this will be done via Fiora Hypermarket (FHL), a subsidiary of Trent.

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