Tata Group not to exercise government call option; will hike VSNL stake via market purchase

The Tata Group will increase its stake in group company Videsh Sanchar Nigam Limited (VSNL) through market acquisitions instead of buying the government’s 26.12% residual stake in VSNL through the exercise of a call option.

The Tata Group has a combined effective shareholding of over 50% in VSNL. The government divested VSNL in 2001, with Tatas acquiring the majority stake in the company. However, the government was holding on to 26.12% stake in the company that gave it a controlling power and two nominees on its board.

Panatone Finvest (a Tata Group entity) holds 40.7% in VSNL, while Tata Sons has 8.51%, Tata Power holds 0.09% and Government of India holds 26.12%. Institutional investors and individuals hold the remaining stake in the company. The government was earlier ready to dispose of the residual stake, but had asked for a golden share in the company. A golden share means that the government would sell its 26.12 per cent stake in the company and in return ask for a single share with controlling stake. This was not acceptable to the Tatas.

Read the Business Standard article.

The Tata Group may hive off water business

The Tata Group may spin off its bottled water business into a separate company. The group’s bottled water business currently includes a 30% stake in US’ third largest bottled water company Energy Brands, Inc. (Glaceau). The group is also believed to be in talks to acquire Dadi Balsara’s Himalayan water brand. Energy Brands is an associate company of the group. Tata Tea holds a 25% stake in it, while the remaining 5% is held by a subsidiary of Tata Sons, the Tata Group’s holding company. The ideal combination is to develop a complete spread of offerings, from tea and coffee to water, under a single company, to cover the entire spectrum of beverage consumption.

Article in Business Standard.

Tatas offload 0.84% in TCS for Rs. 1000 crores

Tata Sons, the holding company of the Tata Group, has raised more than Rs. 1000 crores by selling 0.84% of its equity stake in group company and software major Tata Consultancy Services (TCS). This has taken the total amount raised so far to about Rs. 2800 crores (about $622 mn). It is believed that the proceeds could be used for part-funding Tata Steel’s $12.1 bn-acquisition of Corus.

Tata Sons has sold about 8.1 mn equity shares of the software company to an undisclosed buyer. This is the third time in three months that the holding company has diluted its equity stake in TCS, which on December 31, 2006, stood at 78.3%. On February 6, Tata Sons sold 6.9 mn equity shares raising Rs. 900 crores. In a similar transaction in November 2006, Tata Sons raised another Rs. 900 crores by diluting 0.86% of its stake in TCS. A bulk of it was sold to Mauritius-based HSBC Global Investment Fund.

Read the article in The Economic Times.

Temasek Holdings buys 10% in Tata Sky for Rs. 250 crores; values the DTH provider at Rs. 2500 crores

Singapore-based private fund Temasek Holdings has invested Rs. 250 crores in Tata Sky, the DTH service joint venture between the Tata Group and Star TV, for a 10% stake, belonging to Tata Group holding company Tata Sons. Following this restructuring, Tata Sons’ stake has been reduced to 70%, while Star continues to maintain its 20% holding. This is Temasek’s second investment in the Tata Group of companies. It had earlier acquired about 10% stake in CDMA service provider Tata Teleservices.

In a related development, Sky TV’s competitor, Dish TV is reportedly in talks with Warburg Pincus for diluting a stake to the latter.

Read the article in The Economic Times.