The final countdown: Tata Sons offers to buy stake, Mistry says time to part ways

With Tata Sons on Tuesday offering to buy out the Shapoorji Pallonji Group’s 18.4% stake in the holdco and the SP group saying it was time to separate from the Tata Group, a seventy-year relationship is coming to an end. The decision to part ways has been triggered by concerns on the part of the Tata Group that shares of Tata Sons, pledged by the SP Group, could end up in the wrong hands.

On Tuesday, in a setback for the SP Group, the Supreme Court stayed a move by the former to pledge it shares till October 28. With its finances strained, the SP Group decided to makel an exit from Tata Sons. “Today, Shapoorji Pallonji Group stated before the Supreme Court that separation from Tata Group is necessary due to potential impact this continuing litigation could have on livelihoods and the economy,” the company said.

“The past oppressive actions, and the latest vindictive move by Tata Sons that impact the livelihoods of the wider SP Group community leads to the inexplicable conclusion that the mutual co-existence of both groups at Tata Sons would be infeasible,” it said in a statement.The Tata Group told the SC it was open to buying the shares in Tata Sons held by the SP Group to enable it to raise funds.

For nearly four years now, since October 24, 2016, when Cyrus Mistry was unceremoniously sacked as chairman Tata Sons, the two sides have fought bitterly. The SP Group claimed they had been oppressed as minority shareholders. Both groups traded charges with the Ratan Tata camp alleging Mistry had mismanaged the affairs of the group,which Mistry countered showing how the Tata Group had suffered because of several acquisitions.

Mistry was appointed chairman in December, 2012, in one of corporate India’s most keenly awaited appointments. He had joined the board in September, 2006. The shareholding of the SP Group is valued around Rs one lakh crore according to rough estimates. The market cap of 29 companies of the Tata Group is currently Rs 13.1 lakh crore; this was Rs 8.7 lakh crore three years back. TCS, which accounts for 72% of the group’s market cap has risen nearly 98% in the last three years.

On September 3, Tata Sons had moved the SC seeking to restrain the Mistry Group firms from raising funds by pledging its shares in the holding firm. The SP Group was planning to raise Rs 11,000 crore from various funds and had signed a deal with a marquee Canadian investor Brookfield Asset Management for Rs 3,750 crore in the first tranche against a portion of its 18.4% stake in Tata Sons.