The 56-year-old association between Tata Motors and Daimler AG is about to end. The

RELATED ARTICLES Tata Motors hikes prices by up to Rs 12,000 Import duty cut to hinder industry growth: Tata Motors Tata Motors sales up 16% in January Tata Motors expects subdued growth until middle of next fiscal Tata Motors global sales up 27% in December

German carmaker plans to exit Tata Motors by selling its entire 5.34 per cent stake in the Indian truck and car manufacturer. The sale is expected to fetch Daimler $429 million (about Rs 1,948 crore), people close to the development said.

The Stuttgart-based Daimler, which joined hands with the Tatas in 1954 to make trucks in India, owns 25.6 million shares in Tata Motors. Citigroup Inc is managing the sale, Bloomberg said.

“The 5.34 per cent stake is up for sale at a price ranging from Rs 737 to Rs 761 a share, a 4 to 7 per cent discount to the market price at Monday’s close,” the person familiar with the development said. Tata Motors stock closed at Rs 796.75 on Monday, up 0.18 per cent on the previous close on the Bombay Stock Exchange.

Explaining the rationale of the discounted price, an industry official said, “The size of the block itself suggests why such a big discount.” According to him, Daimler is trying to cash out on what has essentially been a strategic investment in Tata Motors.

“We do not comment on market rumours. I have nothing to say beyond this,” Daimler spokesman Florian Martens told Financial Chronicle over the phone from Germany.

Debasis Ray, corporate communications head of Tata Motors said the company had no comment.

Wilfried Aulbur, chief executive officer of Mercedes-Benz India, a Daimler company, said he was not in a position to comment since he was travelling.

The sale comes in the wake of the Tata Motors share moving up significantly from its record closing low of Rs 126.20 in November 2008.

The merchant banker to this sale is going to open the book for institutional investors and invite after giving them a price range.

The institution, whether a mutual fund or a hedge fund, will inform the merchant banker of the number shares it wants to buy and the deal will be executed on the stock exchange on Tuesday.

The deal could be done in block deal window of exchanges or even open markets.

The two companies will now be competing against each other in the Indian market. Daimler has already decided to build a truck factory in Chennai where production is expected from 2012.

Asked if the money raised by selling the Tata Motors shares would be pumped into the Chennai plant, Marc Binder, director of corporate communications and chief spokesman of Daimler, said, “That is entirely another matter.”

Jaguar Land Rover competes with Mercedes-Benz in the global as well as Indian car market after Tata Motors acquired the two British brands from Ford Motor Company in 2008.