Tata Group in lowball offer for NTT Docomo stake – reports

Indian conglomerate Tata Group has reportedly offered to pay ‘fair market value’ for Japanese telco NTT Docomo’s (TYO: 9437) 26.5% stake in their joint venture Tata Teleservices.
The new Rs23.34 (US$0.37) per share offer is 60% lower than its…

Indian conglomerate Tata Group has reportedly offered to pay ‘fair market value’ for Japanese telco NTT Docomo’s (TYO: 9437) 26.5% stake in their joint venture Tata Teleservices.

The new Rs23.34 (US$0.37) per share offer is 60% lower than its previous offer of Rs58.04 (US$0.91) per share, local media reported. The finance ministry and Reserve Bank of India (RBI) rejected the March offer in line with a bank ruling prohibiting foreign investors from selling stakes in Indian firms at pre-set prices.

The Rs23.46 offer is based on Tata Tele fair market value on 30 June 2014, as determined by PwC.

This offer values Tata Tele as a whole at Rs11bn (US$173m), while the previous one had valued it at Rs27bn (US$425m) .

Docomo has now called upon the London Court of Arbitration to uphold the Rs28.04 per share offer, which values its 26.5% stake at Rs7.2bn.

Responding to a request for clarification, Tata Teleservices (Maharashtra) Limited (BSE: TTML) said it “pertains to equity shares of Tata Teleservices Limited held by NTT Docomo and not of our company, ie Tata Teleservices (Maharashtra) Limited,” declining further comment.”

Tata Teleservices Limited has a 36.54% stake in Tata Teleservices (Maharashtra).

Last year, NTT Docomo exercised its option under a 2009 agreement with Tata Sons, the holding company of the Tata Goup, to request that it sell its stake in the JV for either Rs72.5bn (US$1.14bn) – half of its original investment – or a fair market price, whichever was higher.

In November, Tata Sons reportedly told RBI that it had been unable to find a buyer and sought approval to buy the shares itself at Rs58.04 per share.

However, this January, NTT Docomo filed for arbitration with Tata Sons in a London court because of the Indian company’s failure to find a buyer for its shares.