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NEW DELHI: 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.
Honda is reportedly unhappy with Hero's offer. Munjals of Hero are reportedly asking for 40% discount to current market price. 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, the world's largest two-wheeler maker. 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%, are 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.
The Hero group and Honda came together in 1984 to build and sell motorbikes in the country and their venture was an instant hit. A consumer boom triggered by economic reforms and the success of another Indo-Japanese joint venture, Maruti Suzuki, quickly propelled Hero Honda to the top of the sales charts.
In 2004, the Hero group and Honda had extended their agreement for 10 years, under which the Japanese partner would continue to provide technology to the JV.
Its cleverly-worded, catchy slogan, Fill it, Shut it, Forget it' focused on the Indian consumer's concern for mileage and reliability, helping shut out competition completely. Very soon, Honda was selling more bikes than Bajaj Auto's scooters, despite the latter's decades-old headstart. A separation at India's largest motorcycle maker, if true, will have large implications for the company and its shareholders.
SourceHonda unhappy with Hero offer for buyout - The Economic Times
Honda is reportedly unhappy with Hero's offer. Munjals of Hero are reportedly asking for 40% discount to current market price. 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, the world's largest two-wheeler maker. 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%, are 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.
The Hero group and Honda came together in 1984 to build and sell motorbikes in the country and their venture was an instant hit. A consumer boom triggered by economic reforms and the success of another Indo-Japanese joint venture, Maruti Suzuki, quickly propelled Hero Honda to the top of the sales charts.
In 2004, the Hero group and Honda had extended their agreement for 10 years, under which the Japanese partner would continue to provide technology to the JV.
Its cleverly-worded, catchy slogan, Fill it, Shut it, Forget it' focused on the Indian consumer's concern for mileage and reliability, helping shut out competition completely. Very soon, Honda was selling more bikes than Bajaj Auto's scooters, despite the latter's decades-old headstart. A separation at India's largest motorcycle maker, if true, will have large implications for the company and its shareholders.
SourceHonda unhappy with Hero offer for buyout - The Economic Times
) and try to fill the void in the market with technologically advanced models... A bit far fetched, i agree
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