Tatas to sell Honeywell stake for Rs 126 crore

Move part of the Tata group's decision to exit non-core lines

The Tata group is exiting its 15-year-old joint venture, Tata Honeywell, by selling its 40.62 per cent stake (35.91 lakh shares) to the US-based Honeywell for Rs 126 crore. The two sides hold an equal stake with the balance 18.76 per cent held by financial institutions and public.

Honeywell Asia Pacific, a subsidiary of Honeywell International, will acquire the stake, held by Tata Industries, at Rs 350 a share. The transaction, which is expected to be completed this year, is subject to regulatory approval and other closing conditions.

The move is a part of the Tata group's decision to exit non-core business. The group has divested its interests in Tata Telecom, Forbes Gokak, Tata Infomedia and Steward and Llyods among others in the last few years.

"It is important to note that Tata group companies have many other business relationships with Honeywell and these will continue," said K A Chaukar, managing director, Tata Industries.

"Honeywell is committed to the continued growth of the process management and control systems business in India and expanding on the success we have had with Tata group," said Ash Gupta, country manager and managing director of Honeywell International India.

Tata Honeywell on Friday opened at Rs 351.20, and witnessed a high of Rs 357.25 and closed at Rs 350 on the Bombay Stock Exchange.

The deal will not attract an open offer as this constitutes an inter-se promoter transfer, a Tata Honeywell spokesperson said.

In India, Honeywell also has a R&D software centre in Bangalore. Its other subsidiary, Honeywell India based in Gurgaon, operates in aerospace and transportation space. The buyout maybe a precursor to the consolidation of Honeywell operations in India.

Tata Honeywell registered a 27 per cent growth in turnover to Rs 342.4 crore for 2003-04 compared with Rs 26.91 crore in fiscal 2002-03. During the same period, the company's net profit increased 51 per cent to Rs 25.3 crore compared with Rs 16.8 crore for the year ending March 31, 2003.