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SML Isuzu Limited is the Chandigarh based commercial vehicle manufacturer, which was established in 1983 as Swaraj Vehicles Limited.
The shares of truck-bus-making company SML ISUJU Limited put a 10% lower circuit as soon as the trading started on 28 April. Mahindra & Mahindra Limited announced that she would buy stake in the company. This deal is ₹ 555 crore. After this announcement, there has been a decline in shares.
Mahindra & Mahindra has signed an agreement to purchase a 58.96% stake in Isuzu at a price of Rs 650 per share. Along with this, according to the takeover rules of Mahindra & Mahindra Market Regulator SEBI, it will also bring an open offer to buy 26% stake on ₹ 650/ shares.
SML Isuzu’s stock is trading at Rs 177.30 or 10.00% to Rs 1,596.10. The shares have declined by 16.60% in the last 5 days.
5 big things related to the deal …
- Sumitomo Corporation, a promoter of Isuzu, will buy 63.62 lakh shares of SML at Rs 650 per share, which will cost Rs 413.55 crore. This is 43.96% of SML’s total shareholding.
- 15% stake will be acquired from ISUJU Motors Limited. It will buy 21.70 lakh shares from Anand Mahindra -owned company ISUJU Motors Limited, which is about Rs 141.10 crore.
- Through this deal, Mahindra wants to strengthen her grip in 3.5 tonnes of commercial vehicle segment. M&M has a market share of 3% in this segment, while the Light Commercial Vehicle Segment holds 52%.
- Mahindra & Mahindra is expected to double the market share to 6% soon after this deal. The company’s target is to increase this market share by 2030-31 to 10-12% and more than 20% by 2035-36.
- Kotak Investment Banking Financial Advisor and Khaitan & Co. is looking at the legal side of the deal.
CEO said- This deal is important to achieve 5X growth
Regarding this deal, Dr. Anish Shah, CEO and MD of Mahindra Group, said- This acquisition is an important milestone for the company’s 5X growth vision. He said, it fits perfectly with our capital allocation strategy.
At the same time, Rajesh Jejurikar, Executive Director and CEO of M&M’s Auto and Farm sector said- This deal will strengthen the position of Mahindra in the commercial vehicle market. This will help us to increase market coverage and use manufacturing capacity better.
The company was established in 1983 as Swaraj Vehicles Limited
SML Isuzu Limited is the Chandigarh based commercial vehicle manufacturer, which was established in 1983 as Swaraj Vehicles Limited.
It has a specialization in the production of light and medium commercial vehicles including buses, trucks, ambulances and customized special-application vehicles.
In 1986, after technical and financial cooperation with Mazda Motor Corporation and Sumitomo Corporation, Japan, it was renamed Swaraj Mazda Limited.
In 2011, the “Swaraj” brand was removed and SML Isuzu Limited after Mazda exiting.
Its vehicles are sold in Indian markets and select international markets. Its market share in the commercial vehicle segment is 16%.
