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| Edited By: Yuga Chaudhari |Source: DNA |Updated: Mar 18, 2018, 02:02 AM IST
Hero Group has agreed to buy Honda Motor’s 26% stake in their joint venture Hero Honda Motors Limited (HHML) for around $851 million.
With this deal, the Japanese automaker will completely exit from the 26-year-old joint venture in India.
Hero Investments Private Limited (HIPL), an investment company of the Hero Group, said it is acquiring Honda’s 26% stake in HHML at Rs739.97 a share.
To help it fund the acquisition, Hero Group has also signed definitive agreements with private equity firms BC India Private Investors, an affiliate of Bain Capital, and Lathe Investment Private Limited, a wholly owned subsidiary of Government of Singapore Investment Corporation.
The funds will be used to retire a significant portion of debt raised for the deal, Hero Group said in a statement.
Hero will pay Honda a royalty in exchange for technology, but details of that deal have not been disclosed.
The Foreign Investment Promotion Board (FIPB) has recommended Hero Group’s application to Cabinet Committee of Economic Affairs (CCEA).
Further details will be shared after receiving the necessary approval from CCEA, said the company.
Hero Group has raised nearly $749 million in debt to fund the buyout, a person with direct knowledge of the matter said.
The Hero Honda joint venture was India’s largest motorcycle manufacturer with more than half the domestic market.
The deal allows Hero Group to explore new products and export opportunities in markets where Honda has a presence, a move it was barred from while in a venture with the Japanese automaker.
Hero Group and Honda formed the tie up 26 years ago to set up a two-wheeler manufacturing company.
