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. This strategic acquisition is expected to enhance M&M’s presence in the commercial vehicles segment and increase its market share in the coming years.
According to the agreement, M&M will make an open offer to the public to acquire the remaining 41.04% stake in SML Isuzu. The offer price for the open offer has been fixed at ₹745 per share, which is at a premium of 14.5% over the 30-day weighted average closing price of SML Isuzu’s shares.
The acquisition is expected to be completed by the end of December 2023, subject to regulatory approvals and other conditions. M&M will fund the acquisition through a combination of internal resources and external debt.
So, what does this acquisition mean for M&M and SML Isuzu? Let’s dive deeper into the details.
Why is M&M acquiring SML Isuzu?
The acquisition is a strategic move by M&M to strengthen its bus and truck business, which accounts for a significant portion of its revenue. The company aims to increase its market share in the commercial vehicles segment, which is growing rapidly in India. By acquiring SML Isuzu, M&M will gain access to SML’s product portfolio, including its range of buses and trucks, as well as its network of dealerships and service centers.
SML Isuzu is a well-established player in the commercial vehicles segment, with a strong presence in the bus and truck market. The company has a range of products, including heavy-duty trucks, light commercial vehicles, and buses, which will complement M&M’s existing product portfolio.
What are the benefits for M&M?
The acquisition is expected to bring several benefits to M&M, including:
- Increased market share: M&M aims to increase its market share in the commercial vehicles segment from 10% to 12% by FY2031 and to 20% by FY2036.
- Expanded product portfolio: The acquisition will give M&M access to SML’s product portfolio, including its range of buses and trucks, which will expand its offerings in the commercial vehicles segment.
- Increased presence in the bus market: SML Isuzu has a strong presence in the bus market, with a range of products, including city buses, intercity buses, and luxury coaches. The acquisition will help M&M to increase its presence in this market.
- Synergies and cost savings: The acquisition is expected to bring synergies and cost savings, as M&M will be able to leverage SML’s existing infrastructure, including its network of dealerships and service centers.
What does this mean for SML Isuzu?
For SML Isuzu, the acquisition is a significant step forward, as it will provide the company with access to M&M’s resources and expertise. The company will be able to leverage M&M’s global presence, technology, and distribution network to expand its business.
The acquisition is also expected to bring several benefits to SML Isuzu’s employees, including job security and opportunities for growth and development.
Timeline and impact
The acquisition is expected to be completed by the end of December 2023, subject to regulatory approvals and other conditions. Once the acquisition is complete, M&M will take control of SML Isuzu’s operations and will start integrating the company’s products and services into its own business.
The impact of the acquisition will be felt in the coming years, as M&M aims to increase its market share in the commercial vehicles segment and expand its presence in the bus market.
Conclusion
The acquisition of SML Isuzu by M&M is a significant development in the Indian automotive industry, as it will create a stronger and more competitive player in the commercial vehicles segment. The acquisition will bring several benefits to M&M, including increased market share, expanded product portfolio, and increased presence in the bus market. For SML Isuzu, the acquisition will provide access to M&M’s resources and expertise, which will help the company to grow and expand its business.
