M&M adding bus segment into its portfolio with acquisition of SML ISUZU

"Subject to CCI approval and open offer going through, M&M shall acquire 85% of SML ISUZU for ₹1139 crores"

- Anirudha Jain

Mahindra & Mahindra Limited (“M&M” or “Acquirer”) is a flagship company of Mahindra group which is engaged in manufacturing and sale of passenger cars, Heavy, Medium & Light commercial vehicles, Tractors etc. The equity shares of the company are listed on nationwide bourses.

SML ISUZU Limited (“SML” or “Target”) is a listed company in India primarily in the business of manufacturing and sale of light commercial vehicles (LCVs) and medium commercial vehicles (MCVs) in the automobile industry and has a product portfolio comprising buses, trucks, and specific application vehicles. Incorporated in July 1983 as Swaraj Vehicles Ltd, changed its name to Swaraj.

Mazda Limited, SML started commercial production in 1885 with promoters like Punjab Tractors Limited & Mazda Motor & Sumitomo from Japan. In 2006, SML signed technical collaboration with Isuzu Motors.

In 2009, Sumitomo acquired stake from Punjab Tractors which was by that time was acquired by M&M. Thereafter, the company was renamed to its current name, and Isuzu raised its stake to 15% in SML which continued to be classified as public shareholder.

Proposed Transaction:

M&M has proposed the acquisition in the following manner:

• Purchase of 43.96% equity stake from Sumitomo Corporation, Japan and 15% equity stake from Isuzu Motors Limited in SML. Theconsideration for this is proposed at ₹650 per share amounting to total of ₹555 crores.

• Secondly, an open offer to purchase up to 26% of equity shares from public shareholders of SML for a consideration of ₹1554 per share pursuant to the provisions of SEBI takeover code regulations.

With two different considerations, M&M will buy circa 85% (if all shares are tender in open offer) for a consideration of ~₹1139 crore.