Competition watchdog CCI has approved the merger of Hero Investments Pvt Ltd (HIPL), the investment arm of the Hero Group, into two-wheeler major Hero MotoCorp Ltd (HMCL).
"... the Commission is of the opinion that the proposed combination is not likely to have an appreciable adverse effect on competition in India and therefore, the Commission hereby approves the proposed combination," CCI said in an order.
The commission said HIPL is not engaged in the production, supply, distribution, storage, sale or trade of any kind of goods or services.
"It is observed that the proposed combination relates to amalgamation of an investment holding company of HMCL i.e., HIPL into HMCL and that both the companies are engaged in different business activities, therefore, the proposed combination is not likely to give rise to any adverse effect on competition in India," CCI said in its order.
Earlier this month, HMCL had announced that its board had approved the merger proposal.
The shareholders of HIPL include partnership firm Brijmohan Lall Om Prakash (BMOP), which holds 71.63 per cent, and private equity (PE) investors BC India Private Investors (19.81 per cent) and Lathe Investment Pvt Ltd (8.56 per cent).
In HMCL, the promoter family owns 52.21 per cent through HIPL, which holds 43.33 per cent shares, Bahadur Chand Investment Pvt. Ltd (BCIPL) which holds 8.67 per cent shares, and 0.21 per cent shares through other entities including individuals.
"After the proposed combination, the shareholders of HIPL would directly hold shares in HMCL, which are currently held in HIPL, which would ultimately result in reduction of promoter shareholding in HMCL from 52.21 per cent to 39.92 per cent," CCI said.
Shares of HMCL closed higher by 1.58 per cent at Rs 2,087.80 on the BSE.
