Mahindra Signs Agreement to Buy Majority Stake in SML Isuzu

Mahindra & Mahindra Ltd (“M&M”) today announced that it has entered into an agreement to acquire 58.96% stake in SML Isuzu Ltd. (“SML”) at INR 650 per share, which is an outlay of INR 555 crore. In addition, M&M will make an open offer in accordance with SEBI Takeover Regulations.

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.

Incorporated in 1983, SML Isuzu is a listed company with well-recognized brands, a strong vintage and 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 INR 2,196 crore and EBITDA of INR 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.

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 15% stake held by Isuzu Motors Ltd, public shareholder of SML, for an aggregate consideration of INR 555 crore. M&M would also launch a mandatory open offer for acquisition of up to 26% stake from eligible public shareholders of SML in accordance with the SEBI Takeover Regulations.

Dr. 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.”

Mr. Rajesh Jejurikar, Executive Director and CEO, Auto and Farm Sector, Mahindra & Mahindra Ltd., 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.”

The transaction, including the open offer, is subject to the approval of the Competition Commission of India and is expected to complete within 2025 in accordance with SEBI Takeover Regulations.

Kotak Investment Banking is acting as the financial advisor to M&M and manager to the open offer. Khaitan & Co acted as legal advisor to M&M.