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%, and private equity (PE) investors BC India Private Investors (19.81%) and Lathe Investment Pvt Ltd (8.56%).
In HMCL, the promoter family owns 52.21% through HIPL, which holds 43.33% shares, Bahadur Chand Investment Pvt. Ltd (BCIPL) which holds 8.67% shares, and 0.21% 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% to 39.92%," CCI said.
Shares of HMCL closed higher by 1.58% at Rs 2,087.80 on the BSE.