Mahindra & Mahindra, India’s largest tractor and utility vehicle maker, has signed a deal to acquire 43.3 percent stake in Punjab Tractors at a price of Rs 360 per share. M&M along with its subsidiary Mahindra Holdings and Finance Ltd agreed to acquire the stake from Actis Group and the investment companies of the Burman family, subject to the receipt of requisite approvals.

Four players – Ashok Leyland, Mahindra & Mahindra, TAFE and Tata-CNH (New Holland Tractors) – had shown interest for buying a stake in Punjab Tractors, although M&M and Ashok Leyland were the clear frontrunners. The acquisition will help M&M increase its market share in the tractor segment from the current 31 percent to 40 percent. The deal also gives M&M a 14 percent direct stake in Swaraj Mazda.

“The acquisition adds significantly to our core business of farm equipment. We expect this to enhance value for our shareholders through the synergies which our farm equipment business and Punjab Tractors will together generate,” stated vice chairman & managing director, M&M, Anand Mahindra.

According to president, farm equipment sector, M&M, Anjanikumar Choudhari, the acquisition adds the well-respected Swaraj brand to M&M portfolio. “Some of the PTL models have clear opportunities in overseas markets in which M&M operates. The manufacturing capacities of Punjab Tractors fit well with our future plans, and its North India vendor base will provide us opportunities to derive good benefits from sourcing synergy,” he said.

Kotak Investment Banking advised M&M for this transaction, whereas the sellers were advised by Citigroup Global Markets. Khaitan & Co were the legal advisors to M&M, while Wadia Ghandy advised the sellers on legal matters.