Mahindra & Mahindra has entered into an agreement to acquire a 58.96% stake in SML Isuzu at ₹650 per share, which is an outlay of ₹555 crore.
As part of the transaction, M&M would acquire the entire stake of 43.96% held by Sumitomo Corporation, promoter of SML, and separately also acquire a 15% stake held by Isuzu Motors, public shareholder of SML, for an aggregate consideration of ₹555 crore. M&M would also launch a mandatory open offer for the acquisition of up to 26% stake from eligible public shareholders of SML in accordance with the SEBI Takeover Regulations.
Incorporated in 1983, SML Isuzu is a listed company with well-recognized brands, a strong vintage and a pan-India presence in the Trucks and Buses segment. SML has a market-leading position in the ILCV Buses segment, with around 16% market share. The company reported operating revenue of ₹2,196 crore and EBITDA of ₹179 crore in FY24. It has profitable operations, frugal manufacturing, and strong engineering capabilities.
SML offers significant potential to unlock value through synergies in cost, network, brand, manufacturing, talent, and product complementarities. Our Trucks and Buses business has developed strengths by tapping into technology, design & innovation, and sourcing from our auto business. Together, this would be a powerful combination.
The proposed acquisition is a step towards establishing a strong presence in the >3.5T CV segment, where M&M has a 3% market share today, as compared to a 52% market share in the <3.5T LCV segment. M&M’s Trucks and Buses Division has made meaningful progress over the past few years. This acquisition will double the market share to 6%, with a plan to increase this to 10 – 12% by FY31 and 20%+ by FY36.
Anish Shah, Group CEO & MD of the Mahindra Group, said, “The acquisition of SML Isuzu marks a significant milestone in Mahindra Group’s vision of delivering 5x growth in our emerging businesses. This acquisition is aligned with our capital allocation strategy for investing in high potential growth areas which have a strong right to win and have demonstrated operational excellence.”
Rajesh Jejurikar, Executive Director and CEO, Auto and Farm Sector, Mahindra & Mahindra, said, “SML brings a strong legacy, a loyal customer base, and a credible product portfolio that complements Mahindra’s existing offerings in the trucks and buses segment. This acquisition is a pivotal step toward our ambition to become a full-range, formidable player in commercial vehicles by enhancing market coverage, unlocking operating leverage through platform consolidation, a unified supplier and network base, and better plant utilization. Together, we are well-positioned to scale rapidly and drive profitable growth.”
