TCS shares slip 5% after Tata Sons offloads stake via block deal

Jeannie Matthews
March 13, 2018

India's Tata Sons [TATAS.UL] is set to sell on Tuesday a roughly 1.5 percent stake in its flagship Tata Consultancy Services (TCS.NS) for about $1.25 billion. The company, on Tuesday, sold about 31.3 million shares, after originally offering 28.3 million shares to investors, said a Bloomberg report. On the other hand, a "block deal" is a transaction of over 500,000 shares - or a minimum value of Rs 5 crore - executed through a single transaction.

Other industry experts point out that Tata Sons may choose to use the TCS stake sale proceeds to fund Tata Steel, which is hoping to snap up Bhushan Steel and Bhushan Steel and Power.

TCS shares were offered at between Rs. 2,872 and Rs 2,925 apiece, Reuters reported on Monday.

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A year ago in October, Tata Group had agreed to sell its loss-making mobile telephony business to Bharti Airtel on "a debt-free cash-free basis". Tata Sons announced the sale of the consumer mobile services business to Airtel in October 2017 and had agreed to take care of the unit's debt obligations.

The conglomerate has been planning to raise its ownership over time in five of its largest businesses including Tata Chemicals Ltd. and Tata Steel Ltd., Bloomberg News reported previous year. While past year Tata Songs boosted its stake in Tata Motors Ltd, the owner of Jaguar Land Rover, it is also planning to buy 6.6 percent additional stakes in Indian Hotels Co. that was held by Tata Trusts. That's a discount of 4-6% on TCS' Monday closing price of Rs 3,052 on the BSE.

The holding company is also seeking a $1.5 billion offshore syndicated loan, as it seeks to pay down expensive debt at its telecommunications unit, people familiar with the matter said last week.

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