India’s largest tractor manufacturer, Mahindra & Mahindra, on Thursday announced a 33.33% stake purchase in Japanese tractor manufacturer Mitsubishi Agricultural Machinery (MAM), a subsidiary of the Mitsubishi Heavy Industries.
M&M will initially invest Rs 159 crore in MAM, for which it will receive a third of the voting rights. The acquisition will take place through an issuance of fresh shares and M&M will also get class ‘A’ shares.
The deal is expected to be completed by October 1, following which M&M will have two members on the MAM board.
Pawan Goenka, executive director, Mahindra & Mahindra, said MAM will bring in a lot of value and help M&M explore markets like ASEAN and eastern Eupore as Mitsubishi is a strong brand there.
“We are excited about participating through the equity route in Mitsubishi Agri Machinery. With this alliance we will focus on making aggressive investments in marketing and product development and becoming a significant player in the global agriculture machinery industry” added Goenka.
Both M&M and MAM have been collaborating for a decade — MAM used to supply tractors to M&M for the US market.
Kazuaki Kimura, President & CEO – MHI, Machinery, Equipment and Infrastructure said, “… welcome Mahindra and Mahindra as a partner to Mitsubishi Agricultural Machinery. I am sure the commitment and expertise of both the companies will open a new horizon to the business globally.” The acquisition will help M&M expand its tractor business to different geographies by leveraging Mitsubishi’s technology. Though M&M will benefit globally from the acquisition, there is little chance of bringing Mitsubishi tractors to India as they will be expensive.
The M&M stock ended the day flat, at Rs 1,250.6 apiece. The stock has touched a high of 1,421 and low of Rs 1,106 in the last one year.
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