Hero to acquire 26 pc stake of Honda in Hero Honda

The BML Munjal-led Hero Group, the US$4 billion Indian conglomerate, is acquiring the entire 26 per cent stake of Honda Motor Co., Japan in their joint-venture Hero Honda Motors Ltd (HHML), having lined-up most of the financing for the proposed acquisition. The Hero group of India and Honda Motor Co, Japan – the two promoter groups in the joint venture – HHML - the world’s single largest two-wheeler manufacturer – had announced in December 2010 a restructuring of their respective equity positions in HHML. In its filing today with the Stock Exchanges, Hero Investments Private Limited (HIPL), an investment company of the Hero Group stated that it is acquiring all of Honda’s 26 pc stake in HHML at Rs 739.97 per share. The Hero Group has also signed definitive agreements with Private Equity firms BC India Private Investors II, an affiliate of Bain Capital LLC, and Lathe Investment Private Limited, a wholly owned subsidiary of Government of Singapore Investment Corporation (Ventures) Pvt. Ltd., in terms of which the PE firms will invest in HIPL to raise funds for this acquisition. FIPB has recommended Hero Group’s application for investment by the P/E firms to Cabinet Committee of Economic Affairs (CCEA). Further details will be shared after receiving the necessary approval from CCEA. The funds received as investment made in the holding company by the P/E firms will be used to retire a significant portion of the debt that has been raised by HIPL recently for financing the acquisition.