Tata Sons considers Rs 25,000 crore share buyout from SP Group

Tata Sons is considering a proposal from the Shapoorji Pallonji Group (SP Group) to monetise a portion of its shareholding in the Tata Group holding company for a gross consideration of at least ₹25,000 crore, according to a statement issued after the Tata Sons board meeting.

The proposal was tabled by Noel N Tata, Chairman of Tata Trusts, following earlier discussions involving Noel Tata, Tata Sons chairman N Chandrasekaran and SP Group chairman Shapoor Mistry.

Under the proposed structure, shares held by Sterling Investments Corporation Private Limited (SICPL) and Cyrus Investments Private Limited (CIPL) would be sold at a minimum valuation determined under Rule 11UA of the Income Tax Rules, 1962, with the transaction structured to generate at least ₹25,000 crore.

The SP Group has indicated that it would accept a structure under which the share buyout is completed in two tranches over 18 months. The proposal also envisages Tata Sons initiating a selective capital reduction process through the National Company Law Tribunal (NCLT), with the valuation of Tata Sons shares determined based on income-tax fair value.

Noel Tata suggested that Tata Sons could explore multiple avenues to raise the funds required for the transaction. These could include internal cash flows, sale of listed shares, bringing in investors into some of its newer businesses and listing certain businesses through an offer for sale, according to the statement.

He also proposed that the board initiate the NCLT process and authorise the operating teams of Tata Sons and the Tata Trusts to continue discussions with the SP Group and its bankers, with the teams reporting back to the board.

The proposal comes as the Tata Trusts seek to address the SP Group’s long-standing holding in Tata Sons. The Trusts said the move was a continuation and reaffirmation of their intention to find a “fair and equitable solution” for the SP Group in relation to its Tata Sons holdings.