Mumbai: Mahindra & Mahindra (M&M) announced on Monday that it will buy SML Isuzu, which will make it the fourth-largest company in the truck and bus market for vehicles that weigh more than 3.5 tonnes. This purchase will also increase its share in the bus category (5-12 tonnes) to 21%. With SML Isuzu’s work on electric vehicles, this deal will help Mahindra grow its electric bus business.
On Saturday, Mahindra revealed it would acquire a 58.96% stake in SML Isuzu for ₹650 per share, totaling ₹555 crore. M&M also plans to offer to buy up to 26% more from public shareholders.
Anish Shah, MD and CEO of Mahindra Group, said this move fits the company’s aim to grow its business in the next 5 to 10 years. In the market for vehicles over 3.5 tonnes, Mahindra is currently in fifth place with a 3% market share. They aim to reach a 10-12% share in the next five years, boosted by growth in the light commercial vehicle (LCV) and intermediate and light commercial vehicle (ILCV) categories.
SML Isuzu has a 16% share in the bus segment. Joining forces with Mahindra increases the total share to 21%. Rajesh Jejurikar, executive director of M&M, explained that combining the two companies gives them a strong fourth position in the truck and bus market. He mentioned that there are big opportunities for cost savings, better sharing of technology, and improved networks with suppliers.
Mahindra won’t merge the two companies right away, and SML Isuzu vehicles will still be sold under the Swaraj Mazda brand. On Monday, SML Isuzu’s stocks hit the lower limit, closing at ₹1,590.05 each. Meanwhile, M&M’s stocks went up, closing at ₹2,927.70, an increase of 2.29%.
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