Tata Sons secures bank approval for Tata Tele buy – reports
India’s Tata Sons has reportedly won the approval of the Indian central bank to buy NTT Docomo’s 26% stake in their joint venture Tata Teleservices at a previously agreed price of Rs58.04 (US$0.93) per share.
The total deal value would reportedly…
India’s Tata Sons has reportedly won the approval of the Indian central bank to buy NTT Docomo’s 26% stake in their joint venture Tata Teleservices at a previously agreed price of Rs58.04 (US$0.93) per share.
The total deal value would reportedly amount to US$1.1bn, local and international media reported.
The Reserve Bank of India (RBI) approval forms part of government plans to simplify foreign investment rules, the reports stated.
It would relax a bank ruling last year which prevented foreign investors from selling stakes in Indian firms at pre-set prices.
In a late December memo to the finance ministry, the RBI stated that the larger issue at stake in the Tata Teleservices situation concerns fair commitments in investment contracts, Reuters reported.
The bank also believes India needs to consider its strategic relationship with Japan in terms of foreign direct investments and a broader need to attract foreign funding, reports stated.
The Economic Times reported that the Indian government will have the final say on the matter.
NTT announced last week that it had filed for arbitration with Tata Sons, the holding company for the Tata Group, because of the Indian company’s failure to find a buyer for its shares in the JV.
The Japanese operator had already exercised its option under an agreement with Tata Sons to ask the holding to sell its stake in the JV for either Rs72.5bn (US$1.14bn), half of what it paid for it, or a fair market price, whichever was the higher.
In November, Tata Sons told RBI that it had been unable to find a buyer and sought regulatory approval to buy the stake itself at Rps58.045 per share, the Reuters report stated.
PwC had reportedly determined Tata Teleservices shares had a fair value of Rs23.34 (US$0.38) each.
The companies, RBI and finance ministry were not immediately available for comment.
