Honda unhappy with Hero’s offer, makes offer for counter buyout

Hero Honda Splendor

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Japanese auto and bike manufacturer, unhappy with Hero's offer, has reportedly made an offer to buy Hero's 26% stake in Hero Honda. As per news reports earlier, Hero had made an offer to buy out a part of Honda's stake in the venture.

Munjals of Hero are reportedly asking for 40% discount to current market price, while Honda is expecting the valuation close to current market price. Honda's counter offer of buying out Hero's stake is being seen as a negotiating tactic to get the price possible from Hero for Honda's stake in the joint venture. Honda and the Hero group hold 26 per cent each in Hero Honda. Sources say that negotiations on the deal will take place in Bangkok this year.

Hero Honda reported its highest ever monthly sales at 5,05,553 units in October, registering a jump of 42.75 per cent over the same month last year. Honda wants to increase its royalty from the sales of the joint venture but has been unable to do so because bulk of the sales, about 60%, is contributed by Splendor and Passion, two old bikes. Honda also wants the Hero group to route all spare part purchases through Honda Motorcycles and Scooters India, (HMSI), which the Hero group has been resisting for a long time.

Source : News Reports

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