Just one day after announcing it would sell its 5.34-percent stake in India's Tata Motors, Daimler has completed the sale and reaped roughly 300 million euros ($408 million) from it. Despite the windfall, the stock prices of both companies dipped slightly today.
Daimler hasn't given specific reasons for the sale, but several factors are evident. Tata has become a competitor to Daimler's Mercedes-Benz brand worldwide, thanks to its acquisition of the Jaguar Land Rover group. Daimler Trucks, meanwhile, is attempting to set up its own operation in India to provide commercial vehicles that compete directly with Tata's heavy commercial vehicles. Despite the sour global economy, the Indian market is continuing to boom, and Daimler sees extensive opportunity for growth there, which would only strain a partnership with Tata. The 25.6 million shares sold saw an average transaction price that was discounted 5.8 percent from market value. Daimler and Tata have worked together in the Indian market since 1954 with Tata building licensed copies of Daimler vehicles. Though their partnerships have come and gone over the years, the two have remained solid allies and insist they will through this latest termination of partnership. Source: Daimler, BusinessWeek