Sumitomo Considers Exiting Samvardhana Motherson, Engages Banker for Rs 10,000-Crore Deal; stock slumps ~3%

3 Jan 2024 , 01:44 PM

According to reports, Japan’s Sumitomo Wiring Systems is looking to sell its full 14.15% interest in Samvardhana Motherson shortly in the new year 2024. With a current market capitalization of Rs 71,150 crore, the transaction might be valued well over Rs 10,000 crore.

Sumitomo has enlisted Nomura as the investment banker for the potential stake sale in Samvardhana Motherson. According to an insider, Nomura is now the designated banker for the deal, and outreach has been made to various mutual fund houses. The exit of Sumitomo Wiring Systems is anticipated to alleviate a significant concern for the stock, as mentioned by an informed source.

Another source stated that the transaction is expected to take place at a price of Rs 110-120 per share. He noted that the current market price is Rs 105.25 and that conversations are in the early stages.

Should the block deal materialize within this quarter, it will coincide precisely with the one-year mark since Sumitomo’s partial stake sale in March 2023. During that previous transaction, Sumitomo divested a 3.4% stake in Samvardhana Motherson at a price of Rs 70.1 per share.

The share sale was part of Sumitomo’s global deleveraging plan, which aimed to support partial debt repayments in the face of rising interest rates. Buyers in that deal were Societe Generale and Copthall Mauritius Investment.

At around 1.18 PM, Samvardhana Motherson was trading 2.90% lower at Rs 101.95, against the previous close of Rs 105 on NSE.

For feedback and suggestions, write to us at [e-mail]