The Maruti Suzuki Board has approved preferential allotment of shares to Suzuki Motor Corporation (SMC), as consideration for the acquisition of 100% stake in Suzuki Motor Gujarat. The total number of securities proposed to be issued to SMC as consideration for the acquisition, shall be decided in a subsequent board meeting.
The company had on July 31 approved the termination of the contract manufacturing agreement (CMA) with Suzuki Motor Gujarat (SMG) and acquiring the shares of SMG from Suzuki Motor Corporation (SMC) at a price to be determined in accordance with the CMA and all applicable laws and regulations.
The Maruti management in a press meeting after the board announcement said that given the 4 million car production target and the range of technologies that is being considered including alternate fuel, there is need to reorganise to meet the challenges in next 10 years. Chairman RC Bhargava says the decision was primarily on the basis of changing circumstances and taking appropriate action to ensure one is “ahead of the curve.”
Minority shareholders’ approval would be sought at an EGM or through postal ballot on a date to be fixed for i) terminating the CMA ii) acquiring SMG shares from SMC and iii) approving this acquisiton by issue of MSIL equity shares equal to the book value of SMG as calculated according to the CMA and subject to relevant valuation reports and in compliance with the applicable regulatory and statutory framework including FEMA/SEBI guidelines.
