Mahindra & Mahindra ready to buy 58.96% stake in SML Isuzu, deal will be worth billions:

News Topical,Digital Desk : Mahindra & Mahindra: Mahindra & Mahindra Limited on Saturday informed about buying 58.96 percent stake in SML Isuzu Limited (SML). The company will buy this stake at the rate of Rs 650 per share. This deal will be worth Rs 555 crore. Apart from this, M&M will also bring an open offer under SEBI takeover rules. That is, an open offer will also be brought by the company.

The company is increasing its share in the heavy vehicle segment

This proposed acquisition is a step towards building a strong presence in the commercial segment weighing more than 3.5 tonnes, where M&M has a market share of 3 per cent. On the other hand, M&M has a market share of 52 per cent in the LCV segment weighing less than 3.5 tonnes. Mahindra & Mahindra has said that this acquisition will double its share in the commercial segment weighing more than 3.5 tonnes to 6 per cent, which is planned to be increased to 10-12 per cent by FY31 and more than 20 per cent by FY36.

Good position of SML Isuzu in truck and bus segment

Incorporated in 1983, SML Isuzu is a listed company. It is a well-known strong brand and has a pan-India presence in the truck and bus segment. It has a leading market position in the ILCV buses segment. In the bus segment, SML has a market share of around 16 per cent. In FY24, the company's revenue from operations stood at Rs 2,196 crore and EBITDA of Rs 179 crore was recorded.

This is how the whole deal will happen

According to the information given by M&M to the stock market, as a part of this transaction, Mahindra & Mahindra will buy the entire 43.96 percent stake of SML's promoter Sumitomo Corporation and separately buy 15 percent stake of SML's public shareholder Isuzu Motors Ltd. In this way, the entire purchase will be for Rs 555 crore. As per SEBI takeover regulations, M&M will bring a mandatory open offer to buy up to 26 percent stake from eligible public shareholders of SML.