Tata Group announces merger that will have huge impact on investors

5 June 2024

Under the arrangement scheme of the National Company Law Tribunal (NCLT), the boards of Tata Motors, Tata Capital, and Tata Motors Finance have approved a merger. According to Tata Motors’ issued statement, the merger will take a year to complete. The agreement for the same will be completed through a share swap. This extreme measure was announced on Tuesday by Tata Motors.

The respective shares of Tata Motors Finance will be merged with NBFC Tata Capital under a swap deal. This has been calculated to benefit both companies and their customers. As per the plan, Tata Motors Finance shareholders will get 37 equity shares of Tata Capital for every 100 equity shares, as mentioned by the company in an exchange filing.

The boards of all three namely, Tata Motors, Tata Capital, and Tata Motors Finance have approved the merger under the arrangement scheme of NCLT.  Tata Motors is foreseen to hold a 4.7 percent stake in the new company after the completion of the deal. The company has assured that the merger will not produce any adverse impact on customers or creditors of Tata Motors Finance.

Tata Capital also offers auto loans along with home and education loans. Tata Motors closed 4.79 percent lower at Rs 904.95 on the NSE on Tuesday. Tata Capital had posted a net profit of Rs 3,150 crore in the financial year 2024. Meanwhile, in the same period, Tata Motors Finance had posted a net profit of Rs 52 crore. However, the deal will await regulatory approval.