Mahindra & Mahindra’s share price rose 2.82% to an intra-day high of Rs 2,945 per equity share on the National Stock Exchange. The stock price of M&M climbed on the charts after the company announced that it would acquire SML Isuzu’s 58.96% stake for Rs 555 crore. The stock was among the top five gainers in the Nifty 50.
M&M will acquire 43.96% shares from Sumitomo Corporation and a 15% stake from Isuzu Motors. Both are existing shareholders of SML Isuzu. However, the deal is subject to regulatory approvals, including from the Competition Commission of India (CCI). It is expected to be completed by 2025.
The move aims to increase M&M’s footprint in the commercial vehicle (CV) segment above 3.5 tonnes, in which it presently has a market share of 3%.
It will acquire the company’s shares at Rs 650 per equity share. Following this, under the SEBI’s takeover regulation, M&M will launch a mandatory open offer to acquire up to an additional 26% from public shareholders.
M&M already has a 52% stake in the sub-3.5T light commercial vehicle (LCV) market. After this acquisition, M&M expects to double its market share in the >3.5T segment to 6% at first, and then targets a 10–12% share by FY31 and over 20% by FY36.
How will the acquisition help M&M
The move aims to increase M&M’s footprint in the commercial vehicle (CV) segment above 3.5 tonnes. It presently has a market share of 3% in the commercial vehicle segement.
About SML Isuzu
Initially named Swaraj Vehicles in 1983 was renamed to Swaraj Mazda and eventually SML Isuzu in 2011. The company is in the line of producing light and medium commercial vehicles with a market share of 16%. SML Isuzu is a joint venture between Sumitomo Corporation and Isuzu Motors.
Mahindra & Mahindra stock performance
M&M’s share price has risen almost 5% in the last five trading days. It has given a return of around 9% in the previous one month and over 4% in the last six months. The stock price of M&M has raised investors’ wealth by more than 40% in the past one year.