Eicher Motors falls by Rs 1,040 on reports of Volvo selling its stake in it

Stock of auto firm Eicher Motors fell by Rs 1040.95 on Thursday on reports of Swedish truck maker Volvo AB selling its remaining 3.7 per cent stake in it.

The Eicher Motors' stock fell 5.72 per cent to Rs 17168.80 at 12.27 pm. After closing at Rs 18,209.75 on Wednesday, the auto firm's shares touched a low of Rs 16905.00 in the morning session on Thursday. The company's shares opened at Rs 17501.25 on Thursday morning.

According to a term sheet seen by IFR, Volvo will be selling its remaining 3.7 per cent stake in Eicher Motors for around $278 million, Reuters reported. Volvo is offering about 1 million shares in a price range of Rs 17,190-18,190 in an open market sale.

In March, Volvo sold 1.27 million Eicher shares for around 2.5 billion Swedish crowns ($296.05 million). Volvo bought the Eicher stake in 2008 as part of a deal under which the Swedish company also set up a separate truck and bus making joint venture with Eicher in India.

"Eicher Motors wishes not to comment on any speculative news stories on Volvo," the company said in a statement. It added that all investments and business plans at the two companies' commercial vehicle joint venture continue as planned. A Volvo spokeswoman declined to comment.

Volvo is under pressure to demonstrate the benefits of years of cost cuts and has, in addition to major staff cuts, also sold off non-core assets in recent years, including its aerospace division in 2012, the Reuters report said.