Hero Honda JV to split this month
08 Dec 2010
The Hero Group and Honda are set to separate with a deal to end their 26-year-old joint venture Hero Honda. The Indian partner will buy out the 26 per cent stake owned by its Japanese counterpart.
According to sources familiar with the development, the two partners have agreed that current royalty rate per model paid to Honda would not change, which in 2009 -10 on an average was 2.3 per cent to 3 per cent of sales.
Further, Honda will continue to provide technology and models to the Hero Group during the transition period, for which the minimum is till 2014 as per their existing joint venture agreement.
According to an unnamed source quoted by the PTI, the deal is at the final stages and could be signed within this month. He added that the partners were still engaged in last minute negotiations on the valuation.
The source said that the interest of investors as also all stakeholders of Hero Honda has been accorded top priority during the negotiations which would not be compromised at any cost.
According to reports the Hero Group is arranging funds on its own to finance the buyout of Honda's stake.