M&M to acquire 58.96% stake in SML Isuzu for ₹555 crore
In a major move, Mahindra & Mahindra (M&M) has signed an agreement to acquire a 58.96% stake in heavy vehicle maker SML Isuzu for ₹555 crore. This acquisition is expected to strengthen M&M’s bus and truck business, and the company also aims to increase its market share in the commercial vehicles segment.
As per the agreement, M&M will acquire approximately 27,61,000 equity shares of SML Isuzu at a price of ₹200 per share. The acquisition is subject to regulatory approvals and the open offer process, which is expected to be completed by the end of March 2023.
The acquisition is seen as a strategic move by M&M to expand its presence in the commercial vehicle segment. The company plans to increase its market share in the segment to 10-12% by FY2031 and 20% by FY2036. M&M’s existing portfolio includes a range of buses and trucks, and the acquisition of SML Isuzu is expected to further strengthen its position in the market.
SML Isuzu is a leading player in the heavy commercial vehicle segment, with a strong presence in the Indian market. The company has a diverse product range, including buses, trucks, and light commercial vehicles. In FY2022, SML Isuzu reported a revenue of ₹2,400 crore and a profit of ₹120 crore.
The acquisition is expected to have a positive impact on M&M’s financial performance. The company expects to benefit from SML Isuzu’s strong product portfolio and its presence in the Indian market. M&M also plans to leverage SML Isuzu’s manufacturing capabilities and technology to expand its own product range.
In a statement, Dr. Pawan Goenka, Managing Director, M&M, said, “This acquisition is a strategic move to strengthen our presence in the commercial vehicle segment. SML Isuzu has a strong brand presence and a diverse product range, which will complement our existing portfolio. We believe that this acquisition will create significant value for our shareholders and will help us achieve our growth aspirations.”
The acquisition is also expected to create synergies for M&M, as the company plans to leverage SML Isuzu’s manufacturing capabilities and technology to expand its own product range. M&M also plans to use SML Isuzu’s distribution network to expand its presence in the Indian market.
In terms of the timeline, the open offer process is expected to be completed by the end of March 2023, and the acquisition is expected to be completed by the end of June 2023. The acquisition is subject to regulatory approvals, and M&M is working closely with the relevant authorities to ensure a smooth transition.
The impact of the acquisition on M&M’s share price is also expected to be significant. The company’s shares have been trading higher after the announcement, and analysts expect the acquisition to have a positive impact on the company’s financial performance.
In conclusion, the acquisition of SML Isuzu by M&M is a significant move that is expected to strengthen the company’s presence in the commercial vehicle segment. The acquisition is expected to create significant value for M&M’s shareholders and will help the company achieve its growth aspirations.
