Motherson Sumi Systems (MSSL) share price shed 6 percent in early trade on July 3 after the company board approved the demerger of its Domestic Wiring Harness (DWH) business from MSSL into a new company.
The company board in its meeting held on July 2 approved demerger of DWH business of the company into new company, which will eventually be listed, with mirror shareholding as that of the company.
The company will allot 1 share of new company for every 1 share held in MSSL.
The board also approved the merger of Samvardhana Motherson International Limited (SAMIL) the principal holding company of Motherson Group and promoter of MSSL, into MSSL.
The company will allot 51 shares of MSSL (of face value Re 1 each) for every 10 shares held in SAMIL (of face value Rs 10 each) and MSSL will be renamed as Samvardhana Motherson International Limited.
“The simplification of group structure has been a long-standing request from our shareholders and the proposed reorganization is a step in that direction. The Transaction helps create strong business platforms under the Motherson umbrella which will enhance stakeholder value for the long term," said Vivek Chaand Sehgal, Chairman, MSSL.
CLSA | Rating: Outperform | Target: Rs 110
The business realignment is a medium-term positive but crossholdings remain, however, the minority shareholders would continue to own 38 percent In DWH.
Meanwhile, minority shareholders’ holding in Motherson Sumi (ex-DWH) would fall to 27 percent
The plan is to bring all group businesses into listed entities, reported CNBC-TV18.
Jefferies | Rating: Hold | Target: 105
The new MSS is going to own 100% in overseas company SMRP, along with SAMIL's business. However, need clarity on SAMIL & DWH financials for objective view on the transaction, reported CNBC-TV18.
At 09:17 hrs Motherson Sumi Systems was quoting at Rs 100.25, down Rs 3.40, or 3.28 percent on the BSE.