Ahead of the crucial shareholder meeting to remove Cyrus Mistry from the board of Tata Motors, Tata Sons has increased its stake by 1.73 per cent stake in the automaker. Tata Sons bought 50 million shares at Rs 486.13 apiece for Rs 2,431 crore, data provided by the National Stock Exchange (NSE) showed. Shares of Tata Motors ended 3.5 per cent higher at Rs 470.3 on the NSE. The stock touched a high of Rs 486.25 and a low of Rs 462.25. Following the additional stake buy, Tata Sons’ stake in Tata Motors has increased to 28.71 per cent, and with other group firms and trusts, the Tatas' stake has gone up from 33 per cent to 34.73 per cent.
The increase comes before the December 22 extraordinary general meeting (EGM), to remove Cyrus Mistry and Nusli Wadia as directors. Tata Sons had appointed Morgan Stanley to manage the transaction, and the brokerage on Monday had set an upper cap of Rs 499.8 for the stake buy and the name of the buyer was kept undisclosed.
The shares were bought from multiple sellers, most of whom were foreign investors, said market sources.
Foreign investors were net sellers to the tune of Rs 2,181 crore on Tuesday, according to provisional data provided by stock exchanges. Most of the selling was on account of Tata Motors, said brokers. About Rs 3,000 crore worth of shares in Tata Motors changed hands on the NSE. A report by Bloomberg said Tata Sons was open to buying an additional stake inTata Motors before December 22. Under the Takeover Code, a promoter group can acquire up to five per cent stake in a company without triggering an open offer.
An ordinary resolution, such as the removal of a director, requires a simple majority (50 per cent plus one vote). Following the stake buy, the promoters would need another 15.84 per cent support from public shareholders to pass the resolution on Mistry and Wadia.
After considering DVRs (differential voting rights shares, which provide fewer voting rights to the shareholder), the promoter group has voting rights of 34.16 per cent stake in Tata Motors.
As of September, foreign portfolio investors owned 26.7 per cent in the Indian shares and another 18.15 per cent in the form of American depository receipts. Life Insurance Corporation has 5.11 per cent voting rights. Other insurers and mutual funds own about nine per cent of the voting capital, while individual shareholders and others own 8.55 per cent.