Mahindra and Mahindra and Tech Mahindra to jointly acquire Italian car design company Pininfarina. Both the companies will first form a special purpose vehicle (SPV) and together will acquire 76.06 percent stake in the company
Out of the 76.06 percent stake, Tech Mahindra will hold 60 percent and M&M will hold 40 percent. The two companies will invest 25.3 million euros in the same proportion to buy 76.06 percent sake in the Italian company. The SPV will then make an open offer to public shareholders of Pininfarina for the remaining 23.94 percent stake and also do a rights issue worth 20 million euros. The deal also involves a debt restructuring deal for Pininfarina — as a part of which M&M and Tech Mahindra will provide corporate guarantee of 114.5 million euros to Pininfarina’s lenders.
The acquired company’s net debt stands at 52.7 million euros at the end of June. Therefore the total value is likely to be much more than 25.3 million euros and to that if open offer is added then the valuation is likely to be even higher.
Pininfarina designs cars for Ferrari, Maserati, Rolls-Royce and Cadillac.
Reacting to the news Sarabjit Kaur Nangra of Angel Broking says it may benefit both the companies but in terms of numbers may not be a big deal but the acquired company is a loss making company. So, valuation wise it looks like it is a long-term bet for them.
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