India's Mahindra & Mahindra, known for its muscular SUVs and tractors, said on Saturday it had entered into a deal to buy a 58.96% stake in SML Isuzu for 5.55 billion rupees ($65.00 million) to bolster its truck and bus business.
The acquisition will double Mahindra's market share in the trucks and buses segment of India's fast-growing economy to 6%, with a plan to raise that to 12% by fiscal year 2031, it said.
Mahindra will buy Japan-based Sumitomo Corp's 43.96% stake in SML and Isuzu Motors' 15% stake, apart from launching a mandatory open offer for an additional stake of up to 26% in the company, according to local regulations.
The purchase price is 650 rupees per share, a steep discount to SML's closing price of about 1,773.4 rupees on Friday. The stock has risen about 20% this year, partly on speculation about a deal. The open offer will be for 1,554.6 rupees per share.
"The acquisition of SML Isuzu marks a significant milestone in Mahindra Group's vision of delivering 5x growth in our emerging businesses," Mahindra Group CEO Anish Shah said in a statement.
"This acquisition is aligned with our capital allocation strategy for investing in high potential growth areas which have a strong right to win and have demonstrated operational excellence."
