SP Group to file details of proposed settlement deal with Tata Sons before SC this week

Rajesh Kurup Mumbai | Updated on October 27, 2020

A parting could signal the end of a 70-year partnership between the Tata and Mistry family-led groups

The Shapoorji Pallonji Group is likely to file its proposal for a settlement with Tata Sons before the Supreme Court this week, a move intended to pave way for an amicable settlement of the ongoing legal tangle.

The SP Group is like to file its proposal most probably on Tuesday itself. The filing would mainly highlight the valuation the group expects for the 18.37 per cent stake it holds in Tata Sons and details to part ways, a source close to the development told BusinessLine.

The contours of the deal have to be approved by Tata Sons and the Supreme Court before it is implemented. If agreed upon by all parties, this could signal the end of a 70-year partnership with the Tatas.

On October 15, Tata Sons said it had not received any formal request or proposal from SP Group on the latter's decision to part ways with it. In any event, since the matter is sub-judice, Tata Sons will wait for the court proceedings to resume on October 28, it had said in the statement.

Also read: No formal proposal received from SP Group to part ways with us: Tata Sons

The move comes ahead of the October 28 hearing by the Supreme Court in the case.

Earlier on September 22, the apex court had asked the Mistry family-owned SP Group to maintain status quo regarding pledging of shares the group holds in Tata Sons to raise capital.

Also read: Group told to maintain ‘status quo’ on Tata Sons share pledge

On its part, the SP Group had said said that “mutual co-existence of both groups at Tata Sons would be infeasible... and a separation from the Tata group is necessary”. This would mean the SP Group selling its stake in Tata Sons.

Also read: Shapoorji Pallonji Group to part ways with Tata Sons

The groups – SP Group and Tata Sons - have been in a protracted legal battle since Cyrus Mistry was ousted as the Chairman of Tata Sons in 2016.

According to SP Group’s earlier filing before the apex court, the 18.37 per cent stake is valued at about ₹1.78-lakh crore (total valuation of Tata Sons at ₹9.71-lakh crore) and Tata Sons has the first right of refusal for the stake.

However, according to industry experts, the SP Group may find it difficult to get buyers for its stake in Tata Sons due to its high valuation, while lack of voting rights is also another drawback.

READ THE STORY: High valuation will be a major hurdle in SP Group’s bid to sell stake in Tata Sons’

Published on October 27, 2020

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