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Tata Motors Finance and Tata Capital Merger approved by Board


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Tata Motors Finance, the vehicle financing subsidiary of Tata Motors, is set to merge with Tata Capital, the financial services company of Tata Sons. This merger has been approved by the boards of both companies. The merger will be carried out through a scheme of arrangement under the National Company Law Tribunal (NCLT).

Consideration for the Merger

As part of the merger, Tata Capital will issue its equity shares to the shareholders of Tata Motors Finance. This will result in Tata Motors holding a 4.7% stake in the merged entity.

Background on Tata Capital

Tata Capital is one of the largest diversified non-banking finance companies in India, with an assets under management (AUM) of Rs 1.6 lakh crore. It offers a wide range of financial services.

Background on Tata Motors Finance

Tata Motors Finance primarily provides financing solutions for new and used commercial vehicles, passenger vehicles, dealers, and vendors. It has an AUM of Rs 32,500 crore.

Rationale for the Merger

According to a statement from Tata Motors, this merger aligns with the company’s objective of exiting non-core businesses. It allows Tata Motors to focus its capital spending on emerging technologies and products.

Approval and Timeline

The scheme of arrangement for the merger is subject to approval from regulators such as SEBI and RBI, as well as the NCLT. The approval process is expected to take approximately 9-12 months. The merger will also require the consent of shareholders and creditors of both Tata Motors Finance and Tata Capital.

Transaction Advisors

E&Y, ICICI Securities, and Wadia Ghandy & Co are serving as transaction advisors to Tata Capital (TCL), while PwC, Axis Capital, and AZB & Partners are serving as transaction advisors to Tata Motors Finance (TMFL). These advisors will provide guidance and support throughout the merger process.

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