M&M to Acquire 58.96% Stake in SML Isuzu for ₹555 Crore
In a move aimed at strengthening 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 boost M&M’s market share in the commercial vehicles segment and expand its presence in the industry.
The acquisition, which is subject to regulatory approvals, will give M&M a significant stake in SML Isuzu, a leading manufacturer of buses and trucks in India. The company has been operating in the country for over 70 years and has a strong reputation for producing high-quality vehicles. With this acquisition, M&M aims to leverage SML Isuzu’s expertise and expand its own product portfolio in the heavy commercial vehicle (HCV) segment.
M&M has been focusing on expanding its presence in the commercial vehicles segment, which has been witnessing significant growth in recent years. The company has been investing heavily in research and development to develop new products and technologies that cater to the changing needs of the industry. The acquisition of SML Isuzu is a significant step in this direction, as it will give M&M access to SML Isuzu’s existing product portfolio, manufacturing capabilities, and distribution network.
The acquisition is expected to have a significant impact on M&M’s business, as it will enable the company to increase its market share in the commercial vehicles segment. M&M has set a target to increase its market share in this segment to 10-12% by FY2031 and to 20% by FY2036. The acquisition of SML Isuzu is expected to play a key role in achieving this target, as it will give M&M a significant presence in the HCV segment.
M&M’s acquisition of SML Isuzu is also expected to have a positive impact on the company’s financials. The acquisition is expected to be earnings accretive from the very first year, with an expected return on equity (ROE) of over 15%. The acquisition is also expected to generate significant synergies, with an estimated cost savings of ₹150 crore per annum by FY2025.
The acquisition process is expected to be completed by the end of FY2023, subject to regulatory approvals. M&M has already received an approval from the Competition Commission of India (CCI) for the acquisition, and the company is now awaiting approval from the National Company Law Tribunal (NCLT).
The acquisition of SML Isuzu is a strategic move by M&M to strengthen its presence in the commercial vehicles segment. The company has been expanding its presence in this segment through a combination of organic and inorganic growth strategies. In recent years, M&M has launched several new products in the HCV segment, including the Blazo series of trucks and the Alfa series of buses.
The acquisition of SML Isuzu is also expected to have a positive impact on the Indian commercial vehicles industry. The acquisition will give M&M a significant presence in the HCV segment, which will enable the company to invest in research and development, improve its product offerings, and increase its market share.
In conclusion, the acquisition of SML Isuzu by M&M is a significant strategic move that is expected to strengthen the company’s presence in the commercial vehicles segment. The acquisition will give M&M access to SML Isuzu’s existing product portfolio, manufacturing capabilities, and distribution network, which will enable the company to increase its market share and expand its presence in the industry.
