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Thread: Honda unhappy with Hero offer for buyout

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    Default Honda unhappy with Hero offer for buyout

    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.

    Source
    Honda unhappy with Hero offer for buyout - The Economic Times

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    Super Moderator sunilg's Avatar
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    News approved
    (Been There Done That) x 3.25

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    In what way, this would bring impact on HH customers? Plz edify me..
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    hahahaha... awesome !! i love business deals like these !!

    Quote Originally Posted by whizzkid_ram View Post
    In what way, this would bring impact on HH customers? Plz edify me..
    as of now there seems to be no implication for the consumer. maybe you have to pay more for products and services thats about it.
    Regardless, Life shall go on.

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    Quote Originally Posted by whizzkid_ram View Post
    In what way, this would bring impact on HH customers? Plz edify me..
    Even after the break up, Honda would probably be providing technical help to Hero till 2014.

    Short term there might be no real impact, but 5-10 years down the line when Hero would need to come up with new models without Honda, then it will be the real test for Hero.



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    Quote Originally Posted by NewsReaper View Post
    Munjals of Hero are reportedly asking for 40% discount to current market price. Honda is expecting the valuation close to current market price.
    Haha...why would Honda offer a 40% discount than market price to establish itself in India?

    @Ram - you've the answer; better to wait to see for product launches from Honda.
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    Quote Originally Posted by whizzkid_ram View Post
    In what way, this would bring impact on HH customers? Plz edify me..
    Quote Originally Posted by payeng View Post
    Even after the break up, Honda would probably be providing technical help to Hero till 2014.

    Short term there might be no real impact, but 5-10 years down the line when Hero would need to come up with new models without Honda, then it will be the real test for Hero.

    Might of end use consumers will not know what is happening in the background between Hero Motors and Honda Corp as long as they still see name Hero Honda on bikes they are OK.

    After break up, when bikes seen with just Hero on the decal and not Hero Honda, that will be very interesting to see consumer's reaction.
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    Quote Originally Posted by yellowspunk View Post
    as of now there seems to be no implication for the consumer. maybe you have to pay more for products and services thats about it.
    Quote Originally Posted by payeng View Post
    Even after the break up, Honda would probably be providing technical help to Hero till 2014.

    Short term there might be no real impact, but 5-10 years down the line when Hero would need to come up with new models without Honda, then it will be the real test for Hero.
    I differ on the "no impact" idea... Yes they currently have a technical agreement till 2014... But Honda will mostly likely offer to only maintain current technologies and not provide anything new...
    That could imply nothing new (in terms of technology, not models) should be expected from the HH stable till the Hero group finds a new partner...

    But if I were Honda, i'd go for the kill... Break the technical agreeement and pay whatever fine embedded in the contract (with Hero's own money ) and try to fill the void in the market with technologically advanced models... A bit far fetched, i agree
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    Looks like very few actually care or have a soft corner for our "desi" Hero group.

    Most seem to favor the international giant "Honda" over apna "Hero".. is it the CBR250R effect..??




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    Quote Originally Posted by SriramEfunds View Post
    Might of end use consumers will not know what is happening in the background between Hero Motors and Honda Corp as long as they still see name Hero Honda on bikes they are OK.
    Wonderful statement; I simply cannot resist AGREEING to it.

    I bet, even today, most "junta" think why sell Splendor & Shine in different showrooms
    Skill is what keeps you on a Motorcycle
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