Hero Honda Motors on Monday tumbled nearlyfive per cent in the early trade on the Bombay Stock Exchange, on reports that Japan's HondaMotor had reached an agreement with its Indian partner, Hero Group, to dissolvethe partnership in the two-wheeler maker.
Reacting sharply to the move, the stockopened on a weak note and fell by 4.72 per cent to hit a month-low of Rs 1,745on the BSE, to become the worst performer among the front-line stocks.
Similarly, the scrip plunged 2.62 per centto trade at Rs 1,791.30 on the National Stock Exchange.
According to media reports, Honda will sellits entire stake in the motorcycle maker to the Hero Group's founding family --the Munjals and investment funds by as early as March 2011.
Honda and its Indian partner Hero Groupwill seek approval for the breakup from their respective boards of directorslater this month.
Media reports further suggest thatinvestors are not in favour of Honda Motor selling its share to Munjals-ledgroup on a discounted price, as they fear this well lead to Hero having to paymore in royalty to the Japanese automobile major.
Last week, the stock had tanked 5.9 percent on reports that Hero Group has agreed to increase royalty payments made toHonda Motor to 8 per cent of overall annual sales in return for a technologymakeover and stake-sale.
Meanwhile, the BSE Sensex was trading at20,130.85, up 163.92 points from its previous close.
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