The acquisition will be completed in stages and the first tranche will be in October 2019 with Rs 103.5 crore being the primary investment. The move follows after Mahindra Electric and Meru announced a joint electric vehicle pilot project in Hyderabad.
"With this investment, the terms of conditions give Mahindra the right to appoint a majority of directors to the board of Meru along with control of composition of the board of directors," M and M said in a statement.
Meru started operation in 2006 and conducts business of cab-hailing and radio taxi services across Mumbai, Delhi NCR and Bengaluru. However, its revenue has consistently dipped over the past couple of years.
In the last fiscal ended March, the holding entity reported consolidated revenue of Rs 156.6 crore, down from Rs 277 crore in FY17 and Rs 190 crore in FY18. With this investment from Mahindra, Meru will be able to take on Uber and Ola.
Once the deal closes, private equity firm True North will see its stake in Meru come down from 80 per cent to 35 per cent. It has invested about Rs 575 crore and will look to exit in the next two to three years.