Mahindra & Mahindra Limited (M&M) announced on Friday that it has entered into definitive agreements to acquire a 58.96% stake in SML Isuzu Limited (SML) for a total outlay of Rs 555 crore, strengthening its presence in the trucks and buses segment.
The acquisition includes buying 43.96% equity from Sumitomo Corporation and 15% equity from Isuzu Motors Limited at Rs 650 per share each, aggregating to Rs 413.55 crore and Rs 141.09 crore respectively. Additionally, M&M will make a mandatory open offer to acquire up to 26% of the public shareholding at Rs 1,554.60 per share, in line with SEBI’s Takeover Regulations.
Post-completion, Mahindra will gain control of SML Isuzu, which will become its listed subsidiary.
Strategic Importance
The proposed acquisition aligns with Mahindra’s strategy to grow its commercial vehicle business. Currently, M&M holds a 52% market share in the sub-3.5 tonne LCV (light commercial vehicle) category but only about 3% in the >3.5T CV segment.
This acquisition is expected to double Mahindra’s market share to 6% immediately, with a target to reach 10-12% by FY31 and 20%+ by FY36, according to the company.
About SML Isuzu
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Incorporated in 1983, SML Isuzu is a leading player in the intermediate commercial vehicle (ILCV) buses segment with around 16% market share.
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SML reported a revenue of Rs 2,196 crore and EBITDA of Rs 179 crore in FY24.
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The company has a manufacturing facility in Punjab and exports to countries like Bangladesh, Nepal, Bhutan, Ghana, and Dubai.
Management Commentary
Dr. Anish Shah, Group CEO & MD of Mahindra Group, said,
“The acquisition of SML Isuzu marks a significant milestone in Mahindra Group’s vision of delivering 5x growth in our emerging businesses.”
Rajesh Jejurikar, Executive Director and CEO of Auto and Farm Sector, M&M, added,
“SML brings a strong legacy, a loyal customer base, and a credible product portfolio that complements Mahindra’s offerings in the trucks and buses segment. This acquisition is a pivotal step toward becoming a full-range formidable player in commercial vehicles.”
Timeline and Approvals
The transaction, including the open offer, is subject to regulatory approvals, notably the Competition Commission of India (CCI), and is expected to be completed by December 2025.
Kotak Investment Banking is advising Mahindra on the transaction and managing the open offer, while Khaitan & Co is serving as the legal advisor.
