Eicher Motors ends 12% lower; inks JV with Volvo

MUMBAI: Shares of Eicher Motors fell sharply on Monday soon after it announced a joint venture with AB Volvo as a step-down subsidiary. The share closed at Rs 477.30, down 12.49 per cent or Rs 68.15. It touched a 52-week high of Rs 599 before the announcement was made. The low for the day was Rs 442.30. Traded volume was 10,52,119 shares.

Eicher Motors will transfer to this JV its commercial vehicle business along with components and design service businesses at an enterprise value of $506 million. Volvo will invest $350 million in the venture, including $275 million in cash and its Indian truck dealer and service network valued at $75 million.

Eicher Motors will hold 54.4 per cent stake in this step-down subsidiary and AB Volvo 45.6 per cent. The JV will be jointly managed by Eicher Motors on equal shared-control basis. Volvo will also acquire 8.1 per cent in Eicher Motors from its promoters.