There is a bad news for all the Hero Honda fans. The 26 Year old joint venture finally ended leaving the Hero Honda fans in despair. This means that there will be no Hero Honda brand ever again. Hero Group has already planned to search for some new technological partner.
The Hero Honda board organized a meet on Wednesday wherein the board decided to approve the termination contract to end the most successful joint venture of the country. The announcement was made by Pawan Munjal regarding the break up. He also said that it was the most important and toughest decisions he made in 25 years. Well, this certainly is one bad news for all the fans. Now there will be a “desh ki dhadkan” but no Honda in it.
The deal has it that Munjals shall buy the 26% stake of Honda for an undisclosed amount. Though the amount is not discussed with the media, industry experts say that it will be around $1.2 illion at 30% discount. The Munjals are going to borrow the entire 26% amount to discharge Honda’s share in the successful joint venture.
According to the company officials, though the MoU to part ways is signed by both the companies, yet the deal will be executed in a “Phased Manner” in 2011 through two or more promoters. Financial companies (Lenders) speculated that Munjals may first raise a bridge loan and then go for a term loan and issue of company stocks. It is now officially declared that the joint venture doesn’t exist and as a result both the firms have applied for new licensing.
The time of Hero Honda parting their ways has finally arrived. May be from the next year you will find Hero Group associated with some other company. It will be hard though to imagine Hero without Honda but every good thing comes to an end. Keep guessing Hero’s new partner while Bike Advice wishes both the giants best of luck on their ways.