Mahindra & Mahindra has entered into an agreement with the Sumitomo Corporation, Japan, and SML Isuzu for acquiring 6,362,306 equity shares, representing 43.96% of the equity share capital of SML Isuzu. The share would be acquired at a price of Rs 650 apiece and the aggregate consideration for the same would be Rs 413.55 crore.
M&M has also inked an agreement with Isuzu Motors, Japan, for acquiring 2,170,747 equity shares (representing 15% stake in SML Isuzu) for a total consideration of Rs 141.10 crore.
In addition and in line with the SEBI Takeover Regulations, M&M has launched an obligatory open offer to acquire up to 26% of SML Isuzu from eligible public shareholders. The shares would be acquired at a price of Rs 1,554.60 per share, which is at a discount of 12.01% to the scrip’s previous close of Rs 1,766.70. As a result, shares of SML Isuzu were currently locked in 10% lower circuit at Rs 1,590.05 on the BSE.
M&M stated that the proposed acquisition is a step towards establishing a strong presence in the '>3.5T’ CV segment, where M&M has a 3% market share today, as compared to a 52% market share in the '<3.5T’ CV segment. 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%, with a plan to increase this to 10 - 12% by FY31 and 20%+ by FY36,” the company stated.
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% market share. 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.
M&M said that SML offers significant potential to unlock value through synergies in cost, network, brand, manufacturing, talent, and product complementarities. The company’s Trucks and Buses business has developed strengths by tapping into technology, design & innovation, and sourcing from our auto business. Together, this would be a powerful combination.
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."
The Mahindra Group enjoys a leadership position in farm equipment, utility vehicles, information technology, and financial services in India. It is the world's largest tractor company by volume. It has a strong presence in renewable energy, agriculture, logistics, hospitality, and real estate.
The company reported a 19.06% jump in standalone net profit to Rs 2,964.31 crore in Q3 FY25 as compared with Rs 2,489.73 crore in Q3 FY24. Revenue from operations jumped 20.31% YoY to Rs 30,963.76 crore in Q3 FY25.