Tata Motors board approves split proposal

Delhi Delhi. Tata Motors’ board on Thursday approved splitting the commercial vehicle (CV) business into TML Commercial Vehicles Ltd and merging the passenger vehicle (PV), electric vehicle (EV) and Jaguar Land Rover (JLR) businesses into the existing listed entity with respective investments. As a result of the split, two listed companies with mirror shareholding will be created – one will have the CV business and the other amalgamated company will have the PV, EV and JLR businesses. The share entitlement ratio will be 1:1 – Tata Motors shareholders will have equal shareholding in both listed entities. “This scheme will empower the respective businesses to pursue their differentiated strategies with greater urgency and enhance value for shareholders,” the company said. The transaction is subject to necessary shareholders, creditors and regulatory approvals, which may take about 12-15 months to complete. Tata Motors had announced plans to separate the CV and PV (and JLR and EV) businesses on March 4. As part of this scheme, TML will demerge its commercial vehicle undertaking, comprising the commercial vehicle business (all assets, liabilities and employees relating to the commercial vehicle business) and all its related investments in TML Commercial Vehicles Limited (TMLCV). Further, as per this scheme, the existing passenger vehicle business in Tata Motors Passenger Vehicles Limited (TMPV) will be merged with the existing listed entity TML. On the implementation of this scheme, both TMLCV and TML will be renamed, resulting in two separate listed entities – the CV business and its related investments under the TML name, and the PV, EV business, JLR and related investments under the TMPV name. “As per the scheme, shareholders of TML will receive one fully paid-up share of TMLCV of face value of Rs 2 for every fully paid-up share of Rs 2 held in TML in the same class (“Entitlement Ratio”),” the company said. It clarified that the scheme will not have any adverse impact on employees, customers, creditors and other business partners. PwC Business Consulting Services LLP has provided the share entitlement report for the transaction, with SBI Capital Markets acting as the fairness opinion provider for the share entitlement ratio for the demerger. AZB & Partners is the legal advisor to the transaction. Deloitte Touche Tohmatsu India LLP is the tax advisor to the transaction.