Mahindra & Mahindra ups its styling quotient with Pininfarina acquisition

After months of speculation, it’s finally confirmed. Mahindra & Mahindra, along with Tech Mahindra, the a leading provider of IT, networks and engineering solutions, has taken a controlling stake in renowned Italian design house Pininfarina.

The deal involves Mahindra purchasing a controlling interest of 76.06 percent in Pininfarina. An open offer for the remaining shares will be issued later. Pininfarina will continue to remain an independent company, with Paolo Pininfarina continuing at the head of its board. Mahindra will also invest €20 million (Rs 152 crore) into Pininfarina and provide a guarantee to creditors of €114.5 million (Rs 875 crore). The deal, worth an estimated 168 million euros (Rs 1,284 crore), is expected to close in the first half of 2016.

It is the latest global expansion move by M&M, which acquired Korean carmaker SsangYong in 2010 for $463 million and, in 2014, 51 percent in Peugeot MotoCycles, the two-wheeler arm of the PSA Group.

On November 14, Autocar Professional had reported that a deal between the two companies was in the making. Pininfarina had been operating at a loss for the past 10 years and had racked up a debt of €52.7 million (£37m). Negotiations between Pininfarina’s creditor banks, the main Pininfarina shareholder Pincar and Mahindra & Mahindra have finally culminated in the deal, which includes the selling of Pincar’s shares and re-organising the company debts. 

Pininfarina was founded in 1930 and has designed most famously for Ferrari, but also for Maserati, Rolls-Royce, Alfa Romeo, Lancia and others, as well as recently redesigning Eurostar's trains. In spite of its widespread work, it was arguably the design house’s intrinsic connection with Ferrari that cemented its name in the car design hall of fame and made it a household name.

Having designed around 100 Ferrari models, founder Sergio Pininfarina’s death in 2012 prompted the design house to commission a one-off Ferrari 458 Spider-based model called the Pininfarina Sergio. It also marks 60 years of Pininfarina’s relationship with Ferrari. The Pininfarina Sergio was revealed at the Geneva Motor Show in 2013 and featured at the Geneva Showin 2015, after being signed off for a limited production run of six units. 

It's understood that the deal is intended to give Mahindra more of an international footing and forge relationships with more European manufacturers through Pininfarina's connections. In return, Pininfarina will have access to greater economies of scale, bringing down the costs of manufacturing.

Pininfarina has, in the past, worked with M&M on developing the Halo electric sports car concept and, more recently, collaborated with M&M on the design of the TUV300 SUV.

It is expected this acquisition will give Tech Mahindra a critical foothold in key, early-stage conversations in the automotive and other verticals. Tech Mahindra will also benefit from Pininfarina’s presence in Italy and Germany, the hotbeds of European automotive manufacturing, as well as in the US and China.

For Pininfarina, the acquisition will mean an ability to leverage Tech Mahindra's presence across 90 countries and access to about 780 customers. Tech Mahindra's global delivery model will lend Pininfarina a newly heightened scale to its operations.

Commenting on Pininfarina joining the Mahindra Group, Anand Mahindra, chairman of the Mahindra Group, said: "Pininfarina will add enormous value to Tech Mahindra's portfolio of engineering services. But just as important is the fact that the legendary high-end design credentials of Pininfarina will significantly enhance the design capabilities of the entire Mahindra Group. Given the increasing design sensibilities of today’s consumers, product design will greatly influence customer choice and experience, and hence our success”.

CP Gurnani, CEO and managing director, Tech Mahindra, said: "Our clients want more from us, consistently. Adding Pininfarina's legendary design skills to our Integrated Engineering Solutions enables a strong entry into automotive styling, design & development and reinforces our body engineering capabilities. Further, Pininfarina's 25-year design expertise in industries beyond automotive will give us that winning edge in areas such as Aerospace, Consumer Electronics, Architecture & Interiors and Transportation where we already have a strong footprint."

Paolo Pininfarina, chairman, Pininfarina S.p.A. added, "In a globalised world, entrepreneurship and capital do not need a passport. We are joining hands with a US$ 3.9 billion technology and global partner, and part of the US$ 16.9 billion global Mahindra Group, which will not only strengthen our Italian identity but will open more doors. Tech Mahindra's global presence and global delivery model will allow us to compete for a larger pie of the business."