Hero Honda Split
Encyclopedia
A joint venture between the Hero Group and Honda Motor Company was established in 1984 as the Hero Honda Motors Limited At Dharuhera
India. Hero is the brand name used by the Munjal brothers for their flagship company Hero Cycles Ltd.
Manjul family and Honda
group both own 26% stake in the Company. However the Hero Honda group is set for a split in the end of 2010. After the split the Munjal family will buy Honda Motor’s 26% stake for around $1 billion, or a little less than half the current value of the stake in the stock market.
The Japanese auto major will exit the JV through a series of offmarket transactions by giving the Munjal family—that currently holds 26% stake in the company—an additional 26%. Honda, which also has an independent fully owned twowheeler subsidiary—Honda Motorcycle and Scooter India (HMSI)—will exit Hero Honda at a discount and get over $1 billion for its stake. The discount will be between 30% and 50% to the current value of Honda's stake as per the price of the stock after the market closed on Wednesday.
The Munjal family plans to compensate Honda through high royalty payouts, which could double to nearly 6% of net sales. However, key financial institutions have objected to this move, saying that the deal could favour the Munjals but be detrimental to other shareholders.
's reluctance to fully and freely share technology with Hero (despite a 10-year technology tie-up that expires in 2014) as well as Indian partner's uneasiness over high royalty payouts to the Japanese company. Another major irritant for Honda was the refusal of Hero Honda
(mainly managed by the Munjal family) to merge the company's spare parts business with Honda
's new fully owned subsidiary Honda Motors India (HMI).
Dharuhera
Dharuhera is a census town in Rewari tehsil of Rewari district in the state of Haryana, India. Dharuhera comes under Delhi NCR region and it is an industrial hub.It was founded by Choudhary Nand Ram, a Yaduvanshi Ahir ruler of Rewari.-Geography:...
India. Hero is the brand name used by the Munjal brothers for their flagship company Hero Cycles Ltd.
Manjul family and Honda
Honda
is a Japanese public multinational corporation primarily known as a manufacturer of automobiles and motorcycles.Honda has been the world's largest motorcycle manufacturer since 1959, as well as the world's largest manufacturer of internal combustion engines measured by volume, producing more than...
group both own 26% stake in the Company. However the Hero Honda group is set for a split in the end of 2010. After the split the Munjal family will buy Honda Motor’s 26% stake for around $1 billion, or a little less than half the current value of the stake in the stock market.
The Japanese auto major will exit the JV through a series of offmarket transactions by giving the Munjal family—that currently holds 26% stake in the company—an additional 26%. Honda, which also has an independent fully owned twowheeler subsidiary—Honda Motorcycle and Scooter India (HMSI)—will exit Hero Honda at a discount and get over $1 billion for its stake. The discount will be between 30% and 50% to the current value of Honda's stake as per the price of the stock after the market closed on Wednesday.
The Munjal family plans to compensate Honda through high royalty payouts, which could double to nearly 6% of net sales. However, key financial institutions have objected to this move, saying that the deal could favour the Munjals but be detrimental to other shareholders.
Difference
The rising differences between the two partners that gradually emerged as an irritant. Differences had been brewing for few years before the split over a variety of issues, ranging from HondaHonda
is a Japanese public multinational corporation primarily known as a manufacturer of automobiles and motorcycles.Honda has been the world's largest motorcycle manufacturer since 1959, as well as the world's largest manufacturer of internal combustion engines measured by volume, producing more than...
's reluctance to fully and freely share technology with Hero (despite a 10-year technology tie-up that expires in 2014) as well as Indian partner's uneasiness over high royalty payouts to the Japanese company. Another major irritant for Honda was the refusal of Hero Honda
Hero Honda
Hero MotoCorp formerly Hero Honda is a motorcycle and scooter manufacturer based in India. Hero Honda started in 1984 as a joint venture between Hero Cycles of India and Honda of Japan. The company is the largest two wheeler manufacturer in India...
(mainly managed by the Munjal family) to merge the company's spare parts business with Honda
Honda
is a Japanese public multinational corporation primarily known as a manufacturer of automobiles and motorcycles.Honda has been the world's largest motorcycle manufacturer since 1959, as well as the world's largest manufacturer of internal combustion engines measured by volume, producing more than...
's new fully owned subsidiary Honda Motors India (HMI).