M&M to acquire 58.96% stake in SML Isuzu for ₹555 crore
In a significant move to strengthen its bus and truck business, Mahindra & Mahindra (M&M) has signed an agreement to acquire a 58.96% stake in heavy vehicle maker SML Isuzu for ₹555 crore. The acquisition is aimed at enhancing M&M’s presence in the commercial vehicles market and increasing its market share in the segment.
The news was announced by M&M in a regulatory filing, stating that the company has entered into a definitive agreement to acquire the majority stake in SML Isuzu through an open offer. The open offer will be made to the public shareholders of SML Isuzu at a price of ₹2,175 per share, which is a 15.1% premium over the closing price of SML Isuzu on the BSE on August 16, 2023.
M&M’s acquisition of SML Isuzu is expected to have a significant impact on the company’s bus and truck business. SML Isuzu is a leading player in the heavy commercial vehicle (HCV) segment, with a strong brand presence and a wide range of products catering to various industries such as logistics, construction, and mining.
The acquisition is also expected to help M&M increase its market share in the commercial vehicles segment. The company has set a target to increase its market share to 10% to 12% by FY2031 and to 20% by FY2036. With SML Isuzu’s expertise and product portfolio, M&M is well-positioned to achieve this target and become a major player in the commercial vehicles market.
The timeline for the acquisition is expected to be completed by the end of 2023. The deal is subject to certain conditions, including approval from the Competition Commission of India (CCI) and the National Company Law Tribunal (NCLT).
Market experts believe that the acquisition will have a positive impact on M&M’s share price. The company’s share price has been under pressure lately due to concerns over the economy and the auto sector. However, the acquisition of SML Isuzu is expected to boost M&M’s revenue and profitability, which could lead to a rally in its share price.
In a statement, Dr. Pawan Goenka, Managing Director, M&M, said, “The acquisition of SML Isuzu is a strategic move to strengthen our presence in the commercial vehicles market. The company has a strong brand presence and a wide range of products catering to various industries. We believe that this acquisition will help us increase our market share and become a major player in the segment.”
SML Isuzu’s shares surged 14.9% to ₹2,141.95 per share on the BSE after the news of the acquisition was announced. M&M’s shares, on the other hand, were up 1.9% to ₹1,024.95 per share.
The acquisition is a significant development in the Indian auto sector, which has been facing challenges due to the COVID-19 pandemic and the economic slowdown. The deal is expected to create a strong player in the commercial vehicles market, which could lead to increased competition and better products for consumers.
In conclusion, M&M’s acquisition of SML Isuzu is a strategic move to strengthen its bus and truck business and increase its market share in the commercial vehicles segment. The acquisition is expected to have a positive impact on M&M’s share price and the company’s overall performance.
