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New Delhi, March 7 A final decision on who would win the bid for acquiring controlling stake in Punjab Tractors is expected only towards the end of the current week as sources reveal that negotiations are going on with the principal bidders on not only the price but also some pre-conditions that have been imposed by the bidders.

The main contenders for the stake are Mahindra & Mahindra and Ashok Leyland, each of which is believed to have bid at over Rs 350 per share. While sources close to the development said that Ashok Leyland had submitted the highest bid, the company is also believed to have asked for some pre-conditions, which has resulted in a further round of negotiations.

Market sources added that these preconditions might have to do with a roadmap for acquiring further stake in commercial vehicles firm Swaraj Mazda (in which Punjab Tractors holds 14 per cent stake) and also about taking charge of the current receivables of the company.

Earlier four players (Ashok Leyland, Mahindra & Mahindra, TAFE and Tata-CNH) had evinced interest for buying 43 per cent stake in Punjab Tractors. However, Tata-CNH did not submit a bid by the deadline. Sources added that Actis is currently negotiating with all the three other players in the fray for its 29.3 per cent stake and the Burman family's 14.2 per cent stake in Punjab Tractors.

For Ashok Leyland, a winning bid would not only allow them to foray into the tractor market but also give them the opportunity to strengthen their position in the commercial vehicle market, through Swaraj Mazda. It would also give them an opportunity to access technology from Isuzu, which has a technical tie-up with Swaraj Mazda. "Thereby it would make immense sense for Ashok Leyland to go ahead with the acquisition if there is a clear roadmap allowing them to pick up further stake in Swaraj Mazda, the principle shareholders of which are embroiled in a legal case," an industry analyst said.

According to sources, the valuation for the 43 per cent stake in Punjab Tractors, in addition to the 14 per cent and 33 per cent stake, which the tractor company has in Swaraj Mazda and Swaraj Engines, respectively, could well be at over Rs 1,100 crore.

More Stories on : Mergers & Acquisitions | HCV/LCV/Tractors

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