M&M to Acquire 58.96% Stake in SML Isuzu for ₹555 Crore
In a 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 acquisition is expected to have a significant impact on M&M’s market share in the commercial vehicles segment.
According to the agreement, M&M will acquire 33,33,33,333 equity shares of SML Isuzu at an offer price of ₹166.66 per share. The acquisition is subject to regulatory approvals and is expected to be completed by the end of FY2023.
The acquisition of SML Isuzu is part of M&M’s strategy to increase its market share in the commercial vehicles segment. The company aims to increase its market share to 10-12% by FY2031 and to 20% by FY2036. This acquisition is expected to help M&M achieve this goal by providing it with access to SML Isuzu’s product portfolio and manufacturing capabilities.
SML Isuzu is a leading player in the heavy commercial vehicle segment, with a presence in the Indian market for over four decades. The company has a diverse product portfolio, including buses, trucks, and passenger vehicles. Its buses are popular for their comfort, safety, and fuel efficiency, and are used by both private and public transportation operators.
M&M’s acquisition of SML Isuzu is expected to have several benefits for the company. Firstly, it will provide M&M with access to SML Isuzu’s manufacturing capabilities, which will enable it to increase its production capacity and meet growing demand for commercial vehicles. Secondly, it will give M&M a foothold in the heavy commercial vehicle segment, which is a key growth area for the company.
The acquisition is also expected to benefit SML Isuzu, which has been facing financial challenges in recent years. The company has been struggling to maintain its market share in the face of intense competition from other players in the industry. The acquisition by M&M is expected to provide SML Isuzu with the financial resources and support it needs to turnaround its business.
The impact of the acquisition on M&M’s share price is also expected to be significant. The company’s shares have been under pressure in recent months, due to concerns about the impact of the COVID-19 pandemic on its business. However, the acquisition of SML Isuzu is expected to provide a boost to M&M’s share price, as it demonstrates the company’s commitment to growth and its ability to adapt to changing market conditions.
In a statement, M&M’s Managing Director, Anish Shah, said, “The acquisition of SML Isuzu is a strategic move that will help us strengthen our presence in the commercial vehicles segment. We believe that SML Isuzu has a strong brand reputation and a loyal customer base, and we are excited about the opportunities that this acquisition presents.”
The acquisition of SML Isuzu is also expected to create job opportunities for employees of both companies. M&M has pledged to provide employment to all employees of SML Isuzu, which will help to minimize disruption to the business and ensure a smooth transition.
In conclusion, the acquisition of SML Isuzu by M&M is a significant development in the Indian commercial vehicles industry. The acquisition is expected to strengthen M&M’s presence in the segment, increase its market share, and provide a boost to its share price. It is also expected to create job opportunities for employees of both companies and provide a platform for growth and innovation.
