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Tata Motors' board approves proposal to demerge into two listed companies

The transaction is subject to necessary shareholders, creditors, and regulatory approvals, which can take around 12-15 months to complete

Tata motors

Sohini Das Mumbai

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Tata Motors' board on Thursday approved the demerger of the commercial vehicle (CV) business into TML Commercial Vehicles Ltd and the merging of the passenger vehicle (PV), electric vehicle (EV), and Jaguar Land Rover (JLR) businesses, along with related investments, into the existing listed entity.

As a result of the demerger, two listed companies would be created with mirror shareholding – one housing the CV business and the other amalgamated company will house the PV, EV, and JLR businesses. The share entitlement ratio will be 1:1 – shareholders of Tata Motors will have an identical shareholding in both listed entities.
 

“The scheme will further empower the respective businesses to pursue their differentiated strategies with greater agility and will enhance value for the shareholders,” the company said.

The transaction is subject to necessary shareholders, creditors, and regulatory approvals, which can take around 12-15 months to complete.

Tata Motors had announced the plan to demerge the CV and PV (and the JLR and EV) businesses on March 4.

As part of the scheme, TML will demerge its commercial vehicle undertaking involving the commercial vehicle business (all the assets, liabilities, and employees relating to the commercial vehicle business) and all its related investments into TML Commercial Vehicles Limited (TMLCV). Further, pursuant to the scheme, the existing passenger vehicle business in Tata Motors Passenger Vehicles Limited (TMPV) will be merged into TML, the existing listed entity.

Upon the scheme becoming effective, both TMLCV and TML will be renamed, resulting in two separate listed entities – the CV business and its related investments under the name TML, and the PV, EV business, JLR, and related investments under the name TMPV.

“Pursuant to the scheme, shareholders of TML will receive ONE share of TMLCV of face value Rs 2/- fully paid up for every ONE fully paid-up share of Rs 2/- held in TML of the same class (“Entitlement Ratio”),” the company said.

It clarified that the scheme will not have any adverse impact on employees, customers, creditors, and other business partners.

PwC Business Consulting Services LLP has provided the share entitlement report for the transaction, with SBI Capital Markets acting as the fairness opinion provider for the share entitlement ratio for the demerger. AZB & Partners are the legal advisors to the transaction. Deloitte Touche Tohmatsu India LLP are the tax advisors for the transaction.

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First Published: Aug 01 2024 | 7:42 PM IST

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