M&M to acquire 58.96% stake in SML Isuzu for ₹555 crore
In a significant move, Mahindra & Mahindra (M&M) has announced that it has signed an agreement to acquire a 58.96% stake in heavy vehicle maker SML Isuzu for ₹555 crore. This acquisition aims to strengthen M&M’s bus and truck business, which is expected to have a significant impact on the company’s future growth.
The announcement comes at a time when the Indian automotive industry is undergoing a significant transformation, driven by changing customer preferences, technological advancements, and environmental concerns. The acquisition of SML Isuzu is seen as a strategic move by M&M to expand its presence in the commercial vehicle segment and increase its market share.
According to the agreement, M&M will acquire 58.96% of SML Isuzu’s shares through an open offer, which is expected to be completed by the end of March 2023. The open offer price has been fixed at ₹1,350 per share, which is at a premium of 14.29% over the closing price of SML Isuzu on the Bombay Stock Exchange (BSE) on January 31, 2023.
The acquisition is expected to have a significant impact on M&M’s business, particularly in the commercial vehicle segment. The company plans to increase its market share in the commercial vehicles segment between 10% and 12% by FY2031 and to 20% by FY2036. This is a significant increase from the current market share of around 6.5% in the segment.
The acquisition is also expected to benefit SML Isuzu, which has been facing challenges in recent years due to declining sales and profitability. The company has been working to improve its product lineup and expand its presence in the market, but it has lacked the resources and scale to compete with larger players in the industry.
M&M, on the other hand, has a strong presence in the automotive industry, with a wide range of products including passenger vehicles, commercial vehicles, and tractors. The company has been expanding its presence in the commercial vehicle segment in recent years, and the acquisition of SML Isuzu is seen as a strategic move to accelerate this growth.
The acquisition is also expected to create synergies between the two companies, particularly in the areas of technology, manufacturing, and distribution. M&M has a strong presence in the Indian market, with a wide range of distribution channels and a large dealer network. The company is expected to leverage these strengths to expand SML Isuzu’s presence in the market and improve its profitability.
The acquisition is subject to regulatory approvals, including the approval of the Competition Commission of India (CCI) and the National Company Law Tribunal (NCLT). M&M has assured that it will comply with all regulatory requirements and ensure a smooth transition of the business.
In conclusion, the acquisition of SML Isuzu by M&M is a significant development in the Indian automotive industry. The acquisition is expected to strengthen M&M’s bus and truck business, increase its market share in the commercial vehicle segment, and create synergies between the two companies. As the industry continues to evolve, this acquisition is likely to have a significant impact on the future growth and profitability of both M&M and SML Isuzu.
