InvestorQ : There have been reports that the Pallonji Group and Tatas are moving towards a rapprochement; does that look likely to you?
vaishnavi mhatre made post

There have been reports that the Pallonji Group and Tatas are moving towards a rapprochement; does that look likely to you?

Answer
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vidhya Laxmi answered.
4 weeks ago


With both the parties now agreeing that parting ways is the best option, it looks like the rapprochement should happen sooner rather than later. The final decision will be predicated on the valuations that they agreed upon and the schedule of exit.

It is now reported that as a goodwill gesture considering their long standing relationships, the Shapoorji Pallonji group may allow Tata group easy terms for payment including staggered payments of the consideration for the stake of the Mistry family in Tata Sons.

It may be recollected that the Mistry family has the single largest stake of 18.4% in Tata Sons, which was the stake given to them almost 70 years ago when the Tatas were in need of funding. Mistry family realizes that they have also made substantial money.

While the valuations are still a subject of debate, it is estimated that Tata Sons will have to shell out anywhere between Rs.150,000 crore and Rs.180,000 crore to buy out the 18.4% stake of the Mistry family in Tata Sons, which brings an end to a 70-year relationship.

It is expected that this should hopefully bring to an end the ongoing legal and psychological battle between two most powerful business families in India. However, the precise details of the deal will be announced only after the next court hearing scheduled on 28 October.

According to reports, the valuation of Tata Sons stake remains an open issue. However, it is likely to be valued on four key parameters. These include value of listed companies, value of unlisted firms, brand equity and debt. Mistry family has demanded a court appointed independent valuer for an objective assessment.