Daimler completed the sale of a 5.34% stake in Tata Motors

Article by Christian Andrei, on August 29, 2010

Daimler completed the sale of a 5.34% stake in India's Tata Motors for about 300 million euros ($408 million). But instead of rising, the stock prices of these two firms actually slightly dropped.

No reasons were given for the sale but several factors have been pointed out. With Tata's acquisition of the Jaguar Land Rover group, Tata becomes a competitor to Daimler's Mercedes-Benz brand worldwide.

Meanwhile, Daimler Trucks is working to create its own operations in India to make commercial vehicles that rival Tata's heavy commercial vehicles.

Unlike the rest of the globe, the Indian market is flourishing. Daimler realizes the extensive opportunity for growth in this country and making its moves would only create a tension in its partnership with Tata.

The 25.6 million shares sold saw an average transaction price that was discounted 5.8% from market value. Since 1954, Daimler and Tata have been partners in the Indian market with Tata producing licensed copies of Daimler vehicles.

While the partnership hasn´t been exactly smooth, the two firms say that they remain to be solid allies despite the latest development.

Topics: daimler, tata motors

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