Tata Motors, Warburg Pincus call off Rs2,320-cr Tata Tech deal

Tata Motors has called off a Rs2,320-crore ($360 million) deal to sell 43-per cent stake in Tata Technologies to private fund Warburg Pincus amidst the looming threat of long-term capital gains tax, but said it will continue to explore strategic options to sell its stake in Tata Technologies.

Tata Motors said the two parties have mutually agreed to call off the US private equity firm's proposed investment of around $360 million in Tata Technologies.

As per the deal announced on 15 June 2017, Warburg Pincus was to acquire approximately 43 per cent stake in Tata Technologies from Tata Motors and other Tata entities.

Tata Motors said the deal has been called off by mutual agreement due to delays in securing regulatory approvals as well as due to the failure of the company to meet internal thresholds in performance.

''Due to delays in securing regulatory approvals as well as due to the recent performance of the company not meeting internal thresholds because of market challenges, the parties to the transaction have mutually decided not to proceed with the closure of the transaction,'' Tata Motors said in its statement to the stock exchange.

As per the proposed deal, an affiliate of Warburg Pincus was to acquire around 30 per cent from Tata Motors and its subsidiary Sheba Properties as well as Tata Capital's entire 13 per cent stake.

The proposed stake sale to Warburg was the first big divestment announced by Tata Motors and some of its other group firms since N Chandrasekaran took over in February as chairman of Tata Sons Ltd.

The transaction was aimed at helping Tata Motors pare debt. Its consolidated debt (including that at UK subsidiary Jaguar Land Rover Automotive Plc) stood at Rs79,323.36 crore at the end of fiscal 2016-17.

Tata Technologies provides design, research and development services to the automotive, aerospace and industrial machinery industries.

The proposed investment in Tata Technologies was one of the major investments announced by Warburg Pincus in 2017.

In 2017, Warburg made several investments in Indian companies such as a $350 billion investment in Airtel DTH and $120 million investment in multiplex firm PVR Ltd.