Daimler said to be selling $428M Tata Motor stake

Daimler AG, the world’s second- largest maker of luxury cars, is selling its 5.3 percent stake in Tata Motors Ltd. after more than five decades of ownership, according to a person familiar with the matter.

Daimler is offering as many as 25.6 million shares in India’s largest truck and bus maker, said the person, who asked not to be identified because the transaction isn’t public. Citigroup Inc. is helping to sell the stock for 737.4 rupees to 761.3 rupees apiece in a block deal to be completed tomorrow, raising as much as 19.5 billion rupees ($428 million), according to a sale document.

Stuttgart, Germany-based Daimler is conserving cash as auto markets remain depressed by the global financial crisis and after consumer incentives by European governments expired. The Tata Motors shares have become expendable as Daimler expands its Fuso truck unit outside Japan and the Indian manufacturer takes on Daimler’s Mercedes-Benz cars division.

“The stake hasn’t taken Daimler anywhere in the last 40 years or so, and having cash these days is a luxury,” said Arndt Ellinghorst, an analyst with Credit Suisse in London who has an “outperform” rating on Daimler shares. The German carmaker may be looking to “streamline” its portfolio as it focuses on new truck ventures in Russia and the search for a partner for small cars, he said.