Mahindra to acquire 58.96% stake in SML Isuzu for Rs 555 crore

Mumbai (Maharashtra) [India], April 27 (ANI): Mahindra & Mahindra Ltd (M&M) entered into an agreement to acquire 58.96 per cent stake in SML Isuzu Ltd. (SML) at Rs 650 per share, which is an outlay of Rs 555 crore, according to a statement issued by the automobile major.
In addition, M&M will make an open offer in accordance with the SEBI Takeover Regulations.
The proposed acquisition is a step towards establishing a strong presence in the 3.5T CV segment, where M&M has a 3 per cent market share today, as compared to a 52 per cent market share in the 3.5T LCV segment.
Dr Anish Shah, Group CEO & MD of the Mahindra Group, said, "The acquisition of SML Isuzu marks a significant milestone in Mahindra Group's vision of delivering 5x growth in our emerging businesses. This acquisition is aligned with our capital allocation strategy for investing in high potential growth areas which have a strong right to win and have demonstrated operational excellence."
M&M's Trucks and Buses Division has made meaningful progress over the past few years. This acquisition will double the market share to 6 per cent, with a plan to increase this to 10 - 12 per cent by FY31 and 20 per cent+ by FY36.
Incorporated in 1983, SML Isuzu is a listed company with well-recognized brands, a strong vintage and pan-India presence in the Trucks and Buses segment.
SML has a market-leading position in the ILCV Buses segment, with around 16 per cent market share, the company claims.
The company reported operating revenue of Rs 2,196 crore and EBITDA of Rs 179 crore in FY24. It has profitable operations, frugal manufacturing, and strong engineering capabilities.
As part of the transaction, M&M would acquire the entire stake of 43.96 per cent held by Sumitomo Corporation, promoter of SML, and separately also acquire 15 per cent stake held by Isuzu Motors Ltd, public shareholder of SML, for an aggregate consideration of Rs 555 crore.
M&M would also launch a mandatory open offer for acquisition of up to 26 per cent stake from eligible public shareholders of SML in accordance with the SEBI Takeover Regulations, the statement added.
Rajesh Jejurikar, Executive Director and CEO, Auto and Farm Sector, Mahindra & Mahindra Ltd., said, "This acquisition is a pivotal step toward our ambition to become a full-range, formidable player in commercial vehicles by enhancing market coverage, unlocking operating leverage through platform consolidation, a unified supplier and network base, and better plant utilization. Together, we are well-positioned to scale rapidly and drive profitable growth."
The transaction, including the open offer, is subject to the approval of the Competition Commission of India and is expected to complete within 2025 in accordance with SEBI Takeover Regulations.
Kotak Investment Banking is acting as the financial advisor to M&M and manager to the open offer. Khaitan & Co acted as legal advisor to M&M, added the official statement. (ANI)