Mahindra & Mahindra to Acquire 58.96% Stake in SML Isuzu for Rs 555 Crore

Mahindra & Mahindra Ltd (M&M) has announced plans to acquire a 58.96% stake in SML Isuzu Ltd (SML) for a total consideration of Rs 555 crore. The acquisition will be made at a price of Rs 650 per share. Following this, M&M will launch a mandatory open offer to acquire up to 26% additional stake from public shareholders, in accordance with SEBI Takeover Regulations.

The move is aimed at strengthening M&M’s position in the commercial vehicle (CV) segment above 3.5 tonnes, where it currently holds a 3% market share. In comparison, the company has a 52% share in the light commercial vehicle (LCV) segment below 3.5 tonnes. Through the acquisition of SML, Mahindra expects to double its market share in the >3.5T segment to 6%, with plans to grow it to between 10% and 12% by FY31 and more than 20% by FY36.

SML Isuzu, incorporated in 1983, is a listed company known for its presence in the trucks and buses sector across India. The company holds around a 16% market share in the intermediate and light commercial vehicle (ILCV) bus segment. In FY24, SML reported operating revenue of Rs 2,196 crore and an EBITDA of Rs 179 crore. It operates with a focus on cost-efficient manufacturing and has established strong engineering capabilities.

The transaction is expected to unlock synergies in cost structures, distribution networks, manufacturing, branding, and talent. M&M’s existing Trucks and Buses Division has built technological and sourcing strengths through its broader automotive business, which is anticipated to complement SML’s portfolio.

As part of the transaction, M&M will acquire the 43.96% stake held by Sumitomo Corporation, the promoter of SML, along with a 15% stake held by Isuzu Motors Ltd, a public shareholder. The deal is subject to regulatory approvals, including clearance from the Competition Commission of India, and is expected to be completed within 2025.

Commenting on the acquisition, Dr. Anish Shah, Group CEO and Managing Director, Mahindra Group, said that the deal fits within the company’s broader strategy of investing in businesses with strong growth potential and operational efficiencies. Rajesh Jejurikar, Executive Director and CEO, Auto and Farm Sector, M&M, noted that SML’s strong legacy and customer base would complement Mahindra’s ambition to become a full-range player in the commercial vehicles market.

Kotak Investment Banking is acting as the financial advisor and manager to the open offer, while Khaitan & Co is advising M&M on legal matters.