With difference of options regarding the share stake persisting still, the proposed breakaway by Honda from the 25year old tie with Hero is not materializing as expected. The deal, on the basis of 26.21% stake hold by Hero’s Munjals is yet to be finalized and any final outcome will be made only after proper discussions. Hero group has been in hectic parleys with giants like Carlyle, KKR, Blackstone, Clayton Subiller &Rice and Temasek in this regard. In the Rs9000 crore share worth for Honda, the price of Hero Honda’s share is Rs1736. The share field foresees a fall of this price in the event of a break between these two companies.
Though the part away is getting much focus now there has been a strained relation between these two companies ever since HMSI started its own production some ten years ago. HMSI has secured a sound position in the scooter segment of India and now it is time for it to toll the bell for the motorcycles. It is to be seen whether Hero would easily give up its stake in this segment, in which its net sale tune is 5 million units. The PE people view the deal might take long time for Honda to decide and any proceeds from this break away process will be invested by Honda in its HMSI, said the industry analysts.
The separation will not in any event be a grave loss for Honda, as it can run the show with its own might under Honda Motorcycles and Scooters India. But Hero group would suffer a great loss since it has no technological strength and R&D facilities. Hero has strengthened its dealer network only.