Mahindra & Mahindra (M&M) on Thursday said it has acquired $12 million Italian two-wheeler designing firm, Engines Engineering for an undisclosed amount. M&M has been reportedly eyeing an entry into the two-wheeler business in India, and is said to be in talks with ailing two-wheeler maker, Kinetic Motor.

In a release, the company said that it has signed an agreement with Engines Engineering SpA, to acquire 100% stake in Engines Engineering Srl, the new legal entity which will be formed by transfering the business of Engines Engineering SpA. The transaction is subject to receipt of necessary approvals.

Currently, Alberto Strazzari, chairman of Engines Engineering SpA, holds 85% and three other investors hold the balance in Engines Engineering.

?Demand for offshoring of engineering services has been growing rapidly,? said Hemant Luthra, president, Systech, part of Mahindra Group.

He added that M&M, through Systech, has been looking at acquisition of a reputed design house. ?Acquiring a design house like Engines Engineering provides us the perfect vehicle to penetrate into markets of Europe, China and Russia. It also gives us the impetus to scale up the business, have access to market and technology along with management skills,? he said.

Mahindra has acquired components makers in Europe in recent years to access new technologies and markets. This includes acquisition of Italian GR Grafica Ricerca Desing Srl and gear maker Metalcastello (through a consortium of the vehicle maker and private equity firm ICICI Venture Funds) early this year.

Commenting on the acquisition, Anand Mahindra, vice chairman and managing director, Mahindra Group said, ?Mahindra Systech has the mandate to build globally competitive businesses in selected verticals and this acquisition greatly enhances our capability to do so.?

An analyst from Angel Broking said, ?This is a strategic move from the group to increase the revenues coming in from its component business.?

Engines Engineering is into business of two-wheeler design and developing of motorcycle prototype. The company is associated with a number of well known brands including Benelli, Beta, Ducati, Gilera, Honda, LEM, Malaguti and Yamaha. Apart from these, the company has also developed many products for Spanish and Far East manufacturers.

The shares of M&M closed at Rs 562.75 on Thursday on the BSE, down 0.92%.