In a bid to expand its presence across global markets, Mahindra Two Wheelers Ltd is set to acquire 51 per cent stake in France-based Peugeot Motocycles.
Mahindra Two Wheelers, an unlisted subsidiary of utility vehicle manufacturer Mahindra & Mahindra, will invest €28 million (about ₹215 crore) to finalise the deal.
Peugeot Motocycles, also known as Peugeot Scooters, is part of the €54-billion PSA Group, and makes scooters and mopeds in 50-400cc range. The company, which has two manufacturing plants, employs 500 personnel in Mandeure, France, and 300 in Jinan, China.
“Peugeot is a strong brand globally and we see a lot of synergies, such as in R&D. The deal will enable both Mahindra Two Wheelers and Peugeot Motocycles to speed up their global expansions,” M&M Executive Director Pawan Goenka said at a press conference.
Mahindra Two Wheelers is investing €13 million for the equity purchase and another €15 million to finance projects implemented through the strategic partnership. Peugeot Motocycles will hold the remaining 49 per cent stake, Goenka said. The stake sale will take three months for closure.
Restructuring exercisePeugeot Motocycles is undertaking a restructuring exercise that will be completed before the deal closes. M&M, which will get three positions of the five on Peugeot Motocycles’ board, will maintain status quo for the next two years, he added.
“We would like to see Peugeot Motocycles remaining as a shareholder for a long time,” Rajesh Jejurikar, Chief Executive (Farm Equipment & Two Wheeler Division) said, adding that Mahindra Two Wheelers has no plans to increase its stake.
Following the deal, Mahindra will look at setting up an assembly unit in Vietnam as the country is a thrust area due to its “high acceptance” of French brands.
“India accounts for 21 per cent of the global two-wheeler market. The focus will be on Europe and India,” Goenka added.
On completion of the deal, the French company will become “virtually debt-free”, Goenka said without divulging Peugeot Motocycles’ debt position.
On Tuesday, M&M’s shares fell 2.26 per cent to 1,359.15 on the BSE, which fell 1.11 per cent.