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. The acquisition is a significant development in the Indian automotive industry, which has been witnessing a gradual shift towards electric and hybrid vehicles. In this blog post, we will delve into the details of the acquisition, its impact on M&M’s market share, and the timeline of the deal.
Acquisition Details
As per the agreement, M&M will acquire 58.96% stake in SML Isuzu through an open offer, which will be priced at ₹545 per share. The acquisition is subject to regulatory approvals, including those from the Competition Commission of India (CCI) and the National Company Law Tribunal (NCLT). The deal is expected to be completed by the end of March 2023.
Why M&M Acquired SML Isuzu?
M&M acquired SML Isuzu to strengthen its presence in the commercial vehicle market. The company aims to increase its market share in the commercial vehicles segment between 10% and 12% by FY2031 and to 20% by FY2036. The acquisition will also help M&M to increase its product offerings and expand its reach in the heavy vehicle segment.
Impact on M&M’s Business
The acquisition of SML Isuzu is expected to have a positive impact on M&M’s business. The company will gain access to SML Isuzu’s range of heavy vehicles, including trucks and buses. This will enable M&M to increase its product offerings and expand its reach in the commercial vehicle market.
Moreover, the acquisition will also help M&M to reduce its dependence on the passenger vehicle segment, which has been facing challenges due to rising competition and regulatory pressures. The commercial vehicle segment is less susceptible to these challenges, and M&M’s acquisition of SML Isuzu will enable it to tap into this growth opportunity.
Timeline of the Deal
The timeline of the deal is as follows:
- End of March 2023: Completion of the acquisition
- FY2031: M&M aims to increase its market share in the commercial vehicles segment to 10% to 12%
- FY2036: M&M aims to increase its market share in the commercial vehicles segment to 20%
Open Offer Price
The open offer price for SML Isuzu shares has been fixed at ₹545 per share. This is a premium of 14.5% over the company’s closing price on January 20, 2023.
Conclusion
The acquisition of SML Isuzu by M&M is a significant development in the Indian automotive industry. The deal will enable M&M to strengthen its presence in the commercial vehicle market and increase its market share. The acquisition is expected to have a positive impact on M&M’s business and will help the company to reduce its dependence on the passenger vehicle segment.
As M&M works towards completing the acquisition, it will be interesting to see how the company integrates SML Isuzu’s operations and products into its own business. The acquisition is expected to be completed by the end of March 2023, and we will have to wait and see how it pans out.
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