Morgan Stanley will buy 50 million shares (1.73 per cent stake) in Tata Motors on behalf of an undisclosed client on Tuesday. The shares will be bought at an upper cap of Rs 499.8 per share, nearly a 10 per cent premium to Monday’s closing price on BSE of Rs 454.55. At least three persons in the know said Tatas were the buyer to gain an edge in the EGM voting.
The deal comes days ahead of an EGM called by the automaker at Tata Sons’ request to oust Tata Motors Chairman Cyrus Mistry from the board. At the top end, the deal size translates into Rs 2,500 crore.
Strategists at Bombay House are said to have pre pared likely voting outcomes at the shareholder meetings of six major listed Tata companies to remove Mistry .While their sense is that Tata Sons will get majority support in all, voting margins could be close in a few companies like Tata Motors.
The share purchase is meant to send out a message that the parent will do whatever it takes to protect its interest in the group companies, said a person directly familiar with the decision-making process.
Other than the promoters, foreign institutional investors control 26.1% in Tata Motors, while domestic mutual funds hold 4% and insurance companies 10%, including 5.2% by LIC and 1.6% by ICICI Prudential Life Insurance.