Mahindra & Mahindra Ltd said on Wednesday it has signed a pact to acquire Turkish tractor maker Erkunt Traktor Sanayi AS and its affiliate Erkunt Sanayi AS to strengthen its foothold in the world’s fourth-largest market for farm machinery.
India’s biggest tractor maker said in stock-exchange filings that it will buy 100% of Erkunt Traktor for up to Rs 478 crore ($76 million) in cash. Mahindra will also purchase, initially, an 80% stake in Erkunt Sanayi for up to Rs 257 crore ($41 million). The 80% stake includes a 35% stake held by Erkunt Traktor in Erkunt Sanayi.
The Indian company said it has an option to acquire 100% of Erkunt Sanayi, which makes iron castings and machined parts for farm, construction and automotive equipment, for Rs 322 crore ($51 million).
Both transactions are subject to regulatory and other approvals, and are likely to close by 30 November.
This is Mahindra’s second deal in Turkey this year and the third in Europe within a year and a half. In January, the company had agreed to acquire a 75.1% stake in Turkish farm machinery maker Hisarlar Makina Sanayi ve Ticaret Anonim Sirketi. In March last year, it had agreed to acquire a 35% stake in Finland-based harvester maker Sampo Rosenlew Oy for up to $20.5 million.
Mahindra said the deals will help it expand its Turkish operations and build an export business, especially in the neighbouring markets of the Middle East, Commonwealth of Independent States and Europe.
Pawan Goenka, managing director at M&M, said the company’s strategy in the farm equipment sector is to “globalise aggressively” and expand its portfolio to include new categories of tractors and farm machinery.
Erkunt Traktor was set up in 2003 and is the fourth-largest tractor brand in Turkey with a market share of 6%. It sells tractors under its eponymous brand in Turkey and under the ArmaTrac brand in the export markets.
The company’s revenue in the calendar year 2016 was $88 million and it sold around 4,700 tractors during the year. Exports constitute around 7% of sales. The company has its factory in Ankara, Turkey, and employs around 355 people.
Erkunt Sanayi makes engine blocks, cylinder heads and transmission cases, and has a strong customer portfolio including JCB, MAN and Ford. The foundry unit had revenue of $47 million during 2016.