Tata, SP Group in fresh talks on Tata Sons stake swap

The long-running dispute over Shapoorji Pallonji (SP) Group's stake in Tata Sons may be moving towards a fresh solution. Tata Sons and the SP Group have held fresh discussions to explore ways to monetise part of the latter's stake in Tata Sons, reported The Economic Times.One proposal being discussed is a share swap, under which the SP Group could receive shares of listed Tata companies in exchange for part of its holding in Tata Sons.The discussions come as the SP Group looks to reduce its debt burden, while Tata Sons is understood to be keen on avoiding additional borrowing to facilitate any transaction.WHY IS SP GROUP LOOKING TO SELL?The SP Group owns 18.37% of Tata Sons, the holding company of the Tata Group. According to the report, the group wants to monetise roughly 7% of its stake to help repay part of its estimated Rs 60,000 crore debt.The debt reduction effort is already underway. Last week, the group secured commitments worth about Rs 21,500 crore in the first tranche of its refinancing programme. The fundraising includes Rs 15,200 crore of three-year rupee bonds and about $650 million in dollar bonds, backed by its Tata Sons shareholding. The transaction is expected to close on July 20.WHAT IS THE SHARE SWAP PLAN? Instead of Tata Sons buying back the stake with cash, one option under discussion is a share swap.Under such an arrangement, the SP Group would receive a basket of listed Tata Group company shares in exchange for part of its Tata Sons stake.This could help the SP Group unlock value from its investment without requiring Tata Sons to raise fresh debt for the transaction.However, people familiar with the discussions told The Economic Times that the two sides remain divided over both the structure of the deal and the valuation of the shares involved.WHY IS VALUATION THE BIGGEST HURDLE?One of the biggest sticking points is deciding how much the unlisted Tata Sons stake is worth.Since Tata Sons is not listed on the stock exchange, there is no market price for its shares. That makes valuation more complex than a transaction involving listed companies.According to the report, the combined market value of the Tata Group's 16 listed companies stood at around Rs 25.28 lakh crore on Thursday, while Tata Sons' holdings in these companies were estimated to be worth about Rs 11.9 lakh crore.The SP Group and Tata Sons have reportedly not been able to bridge differences over the valuation of Tata Sons and the listed Tata shares that could be exchanged.WHO HAS BEEN INVOLVED IN THE TALKS?The report said Tata Trusts Chairman Noel Tata, SP Group Chairman Shapoor Mistry and Tata Sons Chairman N Chandrasekaran held an initial round of discussions.It added that Tata executives later held follow-up meetings, including Farokh Subedar, a consultant to Tata Trusts and a close associate of Noel Tata.According to the report, Tata's preference is to avoid a structure that requires Tata Sons to take on additional debt to complete the transaction.WHY NOT LIST TATA SONS?The report says the SP Group continues to believe that listing Tata Sons would be the most effective way to unlock the value of its investment.However, Noel Tata is understood to be opposed to listing the company.The issue has gained fresh attention following Reserve Bank of India regulations relating to upper-layer non-banking financial companies (NBFCs), which had earlier led to speculation that Tata Sons could eventually go public. However, the report notes that there is still no clarity on whether such a listing will happen anytime soon.The discussions could shape the future ownership structure of one of India's largest business groups.If the two sides agree on a share swap or another settlement, it could allow the SP Group to reduce its debt while resolving a long-running issue around the value of its Tata Sons stake.The report also notes that the refinancing agreement requires that within 18 months of the bond issuance, there should either be an announcement of a Tata Sons IPO or an agreement on a stake settlement involving Tata Sons, the SP Group and, if required, a third-party buyer.For now, however, the negotiations remain ongoing, with valuation and deal structure continuing to be the biggest obstacles to a final agreement.- EndsPublished On: Jul 17, 2026 09:30 IST