Diversified business conglomerate Mahindra and Mahindra Ltd (M&M) will invest $25 million (JPY 3 billion) to pick 33 per cent stake in Japanese firm Mitsubishi Heavy Industries Ltd’s (MHI) agricultural machinery arm Mitsubishi Agricultural Machinery Co Ltd (MAM), according to a stock market disclosure.
The deal, which would involve fresh issue of common shares and Class A (non-voting) shares of MAM, is expected to close by October this year.
MAM produces and sells tractors, combine harvesters, rice transplanters and other agri-machinery. The company had revenues of around $408 million in the year ended March 31, 2015.
The partnership will help M&M improve cost competitiveness through joint procurement and optimise the supply chain, it said.
“This will enable strategic growth avenues for MAM through Mahindra USA, China and other international markets, speeding up international expansion. It will also provide a platform for both the companies to leverage technology and product development synergies,” said Rajesh Jejurikar, president & chief executive (farm equipment & two wheeler division), M&M.
Tokyo-headquartered MHI manufactures heavy machinery. In FY15, the company recorded consolidated sales of JPY 3,992.1 billion ($33 billion).