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Volvo to BUY stake in Eicher Motors

October 4, 2007

European automobile major Volvo is reportedly in advanced negotiations to acquire a majority stake in Eicher Motors. As per reports, Volvo has emerged as the front-runner after inspecting the Indian truck makers’ books, pipping DaimlerChrysler.

Report suggests that Volvo had offered Rs 675 an Eicher share against Daimler’s Rs 500. The deal price is expected to be above Volvo’s offer, translating into a market capitalisation of around Rs 2,000 crore for Eicher Motors. This is way above Eicher’s current market price and market capitalisation of Rs 1,202.53 crore.

Volvo may acquire the majority stake in the company either from the promoters or through fresh issue of shares trough the preferential route. The existing promoters headed by Siddhartha Vikram Lal will continue to own a minority stake in Eicher Motors, which could be less than 26%, the report added.

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