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Mahindra & Mahindra Ltd (M&M) has acquired a majority stake in the third largest tractor company in China, Jiangsu Yeuda Yancheng Tractor Manufacturing Co Ltd (Yancheng Tractor), for $26 million. Under the terms of the deal M&M and Yancheng Tractor will form a joint venture, which will have assets of $50 million. M&M will hold 51 per cent stake in the venture and Yancheng Tractor will transfer all its tractor related assets and liabilities to the JV company. The transaction has been done by M&M through its subsidiary, Mahindra Overseas Investment Company (Mauritius) Ltd, said the company informing the BSE. M&M chief Anand Mahindra has also said that it is not pursuing the acquisition of Hummer brand.

This will be M&M’s second investment in China. In 2004, M&M had acquired 80 per cent stake in Chinese company Jiangling Tractor, to form Mahindra China Tractors. Mahindra China Tractors has a 12,000 unit capacity and M&M invested $ 8 million in it. Kotak Investment Banking was the financial advisor to M&M and King & Wood, Shanghai was the legal advisor.

Last month, M&M announced that it would merge its subsidiary Punjab Tractors with itself. It had acquired 64 per cent stake in Punjab Tractors last year through acquiring 43 per cent stake from Delhi’s Burman family and PE firm Actis for Rs 1000 crore. Then later it acquired 20 per cent more through open offer for Rs 437 crore. M&M also bought the assets of Kinetic Motors for Rs 110 crore last month, venturing into the two-wheeler business.

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