Official: Tech Mahindra and M&M form JV Co to acquire Pininfarina

Mahindra & Mahindra has formed a joint venture with IT solutions provider, Tech Mahindra, to purchase a controlling stake in Pininfarina, an iconic Italian brand in automotive and industrial design.

As part of the agreement, Tech Mahindra and M&M shall purchase 76.06% of Pininfarina shares from the current controlling shareholder Pincar S.r.l. at a price of Euro 1.1 per share. This investment by Tech Mahindra and M&M shall be done via a joint venture company ("JVCo"), whose ownership shall be held 60% by Tech Mahindra and 40% by M&M.

This will be followed by an open offer for all the remaining ordinary shares of Pininfarina, at the same purchase price paid for the shares held by Pincar.  A rights issue to infuse funds into the design & styling major will also be executed before the end of 2016.

However, Pininfarina will continue to remain an independent company, listed on the Milan Stock Exchange, with Paolo Pininfarina continuing as the chairman of its board.

Anand Mahindra, chairman of the Mahindra Group, commenting on Pininfarina joining the Mahindra family, 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”.

What the acquisition means for Tech Mahindra

Pininfarina's brand status will now allow Tech Mahindra further access to the company's global portfolio, including the likes of Ferrari, Alfa Romeo, Maserati and Peugeot. This will mean an opportunity for the Mahindra Group-owned company to influence product conceptualization and design & styling through European design house.

The acquisition is expected to give Tech Mahindra a critical foothold in key, early-stage conversations in the automotive and other verticals. The IT and network provider will also benefit from the designer's focused presence in Italy and Germany, the hotbeds of European automotive manufacturing, as well as in the US and an emerging automotive market, China.

What the acquisition means for Pininfarina

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 the Italian company a newly heightened scale to its operations.

Commenting on the acquisition, CP Gurnani, CEO & 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 globalized world, entrepreneurship and capital do not need a passport. We are joining hands with a US $3.9 billion technology & 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."