M&M to acquire 58.96% stake in SML Isuzu for ₹555 crore
Mahindra & Mahindra (M&M), one of India’s leading automakers, has announced a significant move to strengthen its bus and truck business by acquiring a 58.96% stake in heavy vehicle maker SML Isuzu for ₹555 crore. The acquisition, which is subject to regulatory approvals, is expected to enhance M&M’s presence in the commercial vehicles market and increase its market share.
According to a report by CNBCTV18, M&M has signed an agreement to acquire the majority stake in SML Isuzu, which is a leading manufacturer of heavy commercial vehicles, buses, and special application vehicles in India. The acquisition price of ₹555 crore is approximately ₹31.5 per share, which is at a premium of 33% over the current market price of SML Isuzu’s shares.
The acquisition is seen as a strategic move by M&M to expand its footprint in the commercial vehicles market, which has been growing steadily in recent years. With this acquisition, M&M aims to increase its market share in the commercial vehicles segment between 10% and 12% by FY2031 and to 20% by FY2036.
SML Isuzu, which is a joint venture between Swaraj Group and Mitsubishi Motors Corporation, has a strong brand presence in the Indian market and has been a leading player in the heavy commercial vehicles segment. The company has a diverse product range, including trucks, buses, and special application vehicles, and has a strong distribution network across the country.
The acquisition is expected to bring several benefits to M&M, including increased market share, expanded product portfolio, and access to a larger customer base. Additionally, the acquisition is expected to enhance M&M’s presence in the international market, as SML Isuzu has a strong presence in countries such as Nepal, Bhutan, and Bangladesh.
The acquisition is also expected to create synergies between the two companies, including cost savings, improved operational efficiency, and enhanced product offerings. M&M has a strong track record of integrating acquisitions and has successfully integrated several companies in the past, including its acquisition of SsangYong Motor Company in South Korea.
The acquisition is subject to regulatory approvals, including approvals from the Competition Commission of India (CCI) and the National Company Law Tribunal (NCLT). The deal is expected to be completed within the next 6-8 months, subject to the receipt of necessary regulatory approvals.
The news of the acquisition has been well-received by the market, with M&M’s shares surging by over 5% in intraday trading on the news. SML Isuzu’s shares, on the other hand, saw a significant increase of over 20% in intraday trading.
In conclusion, the acquisition of SML Isuzu by M&M is a significant strategic move that is expected to strengthen M&M’s presence in the commercial vehicles market. The acquisition is expected to create synergies between the two companies, increase market share, and enhance product offerings. As the deal is subject to regulatory approvals, investors will be eagerly awaiting the outcome of the deal.
