Munjal family of Hero group may buy 6% stake in Hero Honda directly from Honda motor company by 24th October 2010 according to CNBC TV report. Hero Honda is a joint venture between Munjal family own Hero group and Honda motor corporation of Japan. Honda Motor corporation owns 26% stake in Hero Honda. Honda is divesting its 26% stake in Hero Honda to exit the joint venture.
Earlier Munjal family was planning to form SPV (Special purpose vehicle) to buy the 26% stake of Honda in Hero Honda, now it’s planning to buy 6% directly from Honda. The deal may be finalised by 24th October 2010. The remaining 20% will be bought through SPV route. According to sources the deal is structuring between KKR and Munjal family for remaining 20% stake which is to be bought by SPV route.
Currently the deal structure is like 51% of SPV will be owned by Munjal family which is 10.20% stake of Hero Honda and KKR will take 30% share of SPV which is 6% stake of Hero Honda. The Munjal family has offered additional 19% stake of SPV to KKR on which consideration is going on. If KKR will accept the term it will have 9.8% in Hero Honda. Munjal family owned hero group directly or indirectly own 42.2% in Hero Honda.