Mumbai, April 27
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.
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
Reader Comments
Smart move by Mahindra! Their commercial vehicle division has been doing well and this acquisition will give them instant market share. Excited to see how they leverage SML Isuzu's bus expertise 🚌
I hope this doesn't lead to job cuts at SML Isuzu. Mergers often result in restructuring and layoffs. The article mentions operational excellence but doesn't address employee concerns.
₹555 crore seems like a fair valuation considering SML's revenue and market position. Mahindra's distribution network combined with SML's products could be a game changer in the CV space!
Interesting to see Mahindra doubling down on commercial vehicles when everyone's talking about EVs. Hope they have an electric strategy for these acquired assets too âš¡
As a long-term investor in M&M, I'm cautiously optimistic. The 20% market share target by FY36 seems ambitious but achievable if they execute well. The stock reacted positively today.
SML Isuzu buses are really popular in rural areas. If Mahindra can improve the quality further while keeping prices competitive, this could be a win for both companies and customers.
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