3 US based firms may pool in for 18 percent stake in Hero Honda

According to the latest news in India, Honda is planning to step out of Hero Honda. Hero Honda Motors will now proceed its journey without Honda. The intentions of Honda's withdraw was made public recently by the company's officials.Now according to another sensational news, three US based PE companies namely Carlyle, Kohlberg Kravis & Roberts (KKR) and Warburg Pincus are planning to pool in to a single entity and head for the 15-16% stake in the Hero Honda Motors. With this news, the withdrawal of Honda Group iss fuether confirmed.

Hero Honda has become the India's largest motorcycle company with Honda Group and the Hero Group of India. Now after such a long journey of success and fame it is difficult to comment on the fate of the company without the second essential part. Munjal owned group is in final discussions with the PE firms and is expected to land on a solution soon. These companies are convinced to fund the acquisition of Honda’s 26% shareholding, which is presently valued Rs 9,300 crore approximately in the joint venture company.The big transaction is expected to take place in two major phases. As per the first phase, the Hero group will buy Honda's stake which will in turn bridge the bank loans. This step will not disturb the Sebi takeover code as the transaction is between the two promoters of the same company with 20% open offer from shareholders.

Coming to the second phase of the transaction, the private companies will buy the shares of SPV. This will again bridge the bank loans for the company.If the above transaction takes place just as decided by the companies then the Hero group of India will be the largest stake holder of the company with 34-36% whereas the private companies will constitute around 18% stake indirectly in the company. Talking about the Honda group, it will completely exit from the company and its related activiies.