Tata Chemicals Limited (BSE:500770) is in talks to buy the battery materials business of Johnson Matthey Plc (LSE:JMAT) in a deal that can provide an edge to the Tata group in the fast-growing electric vehicle market, two people with direct knowledge of the plan said. The Tata group company is one of the frontrunners in the race to buy this key business from Johnson Matthey, the people said, requesting anonymity. A deal could be struck at a valuation of $500-700 million, they added.

The deal will help group company Tata Motors expand its range of electric vehicles and secure a cost advantage over rival carmakers in the EV space, as none of them have in-house battery materials manufacturing ability. The deal is in line with Tata group's aspirations to lead the Indian EV market, where it has created an early lead with its Nexon EV offering. A Tata Chemicals spokesperson said, "the company, as a policy, does not comment on media speculation or rumours".

Responding to a query on the ongoing discussions for the proposed deal, Nick Laitner, a Johnson Matthey spokesperson from London, said, "Johnson Matthey announced on 11 November that it would be looking for a buyer for its battery materials business. We are having a number of discussions with various companies, and it is too early to comment any further on these".