Mahindra bids to acquire Peugeot's 51% shares
Snapshot: This deal will involve an infusion of 15 Million Euros into the loss making business of Peugeot Motorcycles.
Finally, the long running rumors about the Mahindra Two Wheelers Ltd (MTWL), a wholly owned subsidiary of Mahindra&Mahindra Ltd. (M&M), in talks to acquire the Peugeot Motorcycles (PMTC) has come to an end, with the latter being made a deal by the MTWL through a binding offer to acquire a 51% stake in PMTC. The complete details of the deal are not out yet other than the filing made by the MTWL at the National Stock Exhchange.
M&M, in the filing, said, “Mahindra Two Wheelers Ltd (MTWL), an unlisted subsidiary of Mahindra & Mahindra Ltd and part of the $16.5 billion Mahindra Group, has made a binding offer to acquire a 51% stake in Peugeot Motorcycles (PMTC), part of the Euro 54 billion PSA Group based in France.”
This deal will involve an infusion of 15 Million Euros into the loss making business of Peugeot Motorcycles. “The transaction between MTWL and PSA, subject to Works Council consultation, as part of the employee dialogue process and anti-trust law, would involve the infusion of Euro 15 million into PMTC to finance projects implemented through the strategic partnership, and further sale of shares by PSA which would allow MTWL to take a 51% stake in PMTC.” said the filing.
The French manufacturer is showing losses for over a decade now. PSA currently has an employee strength of 800 people across manufacturing facilities in France and China and is facing stiff competition from the largest scooter manufacturer in Europe, Piaggio.
On the other hand, MTWL, which came into existence in 2008 after acquiring Kinetic Motors, has been growing rapidly in India and now they are entering the global markets also with the latest launch, the Gusto. Mr. Pawan Goenka, ED, Mahindra & Mahindra, have always insisted that, M&M is interested and open for any sort of Merger and Acquisition opportunity in the automotive space.
The deal will benefit Peugeot in terms of financial aide and Mahindra will be benefited with the experience of PSA in terms of technology. We hope that Mahindra soon brings some Peugeot scooters in India too.
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