Mistry versus Tata: No chance of reconciliation as Tata Sons not keen to buy SP Group�s stake

30-Oct-2020

Cyrus P. Mistry�s legal battle with Tata Group since being ousted as the chairman of Tata Sons in November 2016 is unlikely to find an amicable solution anytime soon, with the $113 billion salt-to-software conglomerate is reportedly unwilling to make any concessions, including buying out the Shapoorji Pallonji Group�s (SP Group) stake. On Thursday, the SP group the single largest shareholder in Tata Sons with an 18.4 per cent stake submitted a separation plan to the Supreme Court that will sever its 70-year-old ties with the Tatas, seeking a pro-rata division of all the Tata Sons assets based on its stake in the Tata group holding company. The Tata Sons will try to avoid taking squeezed out route under Article 75 because it would mean buying the SP group�s stake, ET reported citing top officials familiar with the development. It is worth noting that Article 75 gives Tatas the power, through a special resolution, to squeeze out the Mistry family by buying out their shareholding at fair market value, which the National Company Law Appellate Tribunal (NCLAT) had pegged at more than Rs 1 lakh crore in 2019. The financial daily quoted an official with knowledge of the matter as saying, �Buying out Mistry�s stake was a suggestion made in the context of what could be done before the Mistry family pledged Tata Sons shares. There is no question of giving him that option now.� The Tatas is expected to put forward the argument that the case came up for hearing before the top court as they are appealed the verdict of the NCLAT that had quashed Mistry�s sacking as chairman of Tata Sons. This was the main legal issue before the court and not the �settlement� of the fight between the Tatas and SP Group. Plus, the conglomerate would immediately request that the stay on SP Group�s pledging of Tata Sons shares be made permanent, and the likely exit of the SP Group from Tata Sons was not before the court, the publication mentioned, citing unnamed sources. Given that the bitter relations between Ratan Tata and Mistry, there is little chance that two tycoons are ready to bury the hatchet, especially Tata wants court�s assistance to clear his name of all the �allegations and mudslinging done by SP Group since 2016�, a top group official told the daily on condition of anonymity. He went on add that there is bitterness over "Mistry�s allegations and he won�t get an easy way out. If discussions do touch upon valuations at any stage which is unlikely in the near future, Tata Sons will strictly go by YH Malegam's valuations and not what is sought by the Mistry family.� Back in 2016, chartered accountant Malegam had valued Tata Sons at around Rs 58,000 crore. Last month, the SP Group had mentioned that it values its stake at Rs 1.75 lakh crore. The publication quoted an official aware of the matter as saying that the SP group is in dire need of funds and therefore floated the scheme of separation. Further, the Tata Group has no interest in their offer and does not take such valuations seriously.