The terms of the grand alliance involving MG Motors India, the wholly owned subsidiary of the Chinese auto major that owns the British automaker Morris Garages, have been finalised after months of negotiations between JSW Group Chairman Sajjan Jindal and Shanghai-based SAIC Motor Corp, according to people with knowledge of the cross-border agreement. The local business of MG might possibly be valued at $1 billion.
A formal announcement is expected for later this month or by Diwali, pending any unforeseen developments. By January 2024, an electric vehicle rollout is expected to begin under the direction of the new corporate partnership. Legal paperwork is now being completed by both parties.
A private firm owned by Jindal will initially own 32–35% of MG Motor India in the first part of the wide agreement, with SAIC owning the remaining 51%. An Indian financial institution will hold about 8% of the stock, while local workers and Indian MG dealers will have 6-7%. The deal’s specifics and the fact that none of the listed JSW Group firms will be participating were originally reported by ET in its issue of June 14th.
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MG Motors India Will No Longer be a Chinese Company:
A staggered plan for change of control is being thought about in order to take advantage of the tax incentives connected to loss-making firms.
Once the losses are recovered, an IPO of MG Motors India will be issued as an offer for sale (OFS) in which current investors, primarily SAIC, would sell equity. This IPO was envisaged even before the alliance talks got underway.
Following the IPO, the Chinese ownership will gradually decrease to between 38 and 40%, while Sajjan Jindal’s stake will increase to 49% with a potential path to 51%. Employees and dealers of the corporation in India may wind up owing between 8 and 9%. The valuation of MG Motors India is anticipated to be determined at Rs 7,000–8,000 crore, significantly less than the initial demand of $8–10 billion, as losses continue to mount.
Under 49% Chinese ownership, MG Motors will no longer be classified as a Chinese corporation. Additionally, the board and management will be predominately composed of Indians. Additionally, a new brand identity that represents the corporate identities of both partners is in the works. Additionally, the business is trying to find a new CEO for the project.
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