Mahindra to acquire majority control in SML Isuzu at Rs 650 per share; launches open offer at Rs 1,554.60 per share

Mahindra & Mahindra Ltd (M&M) has announced that it will acquire a 58.96% stake in SML Isuzu Limited (SML) for an aggregate consideration of Rs 555 crore. The acquisition includes purchasing a 43.96% stake from Sumitomo Corporation and a 15% stake from Isuzu Motors Limited, both at a price of Rs 650 per share.

Additionally, M&M will make a mandatory open offer to acquire up to 26% of SML’s public shareholding at Rs 1,554.60 per share, in line with SEBI’s Takeover Regulations.

Advertisement

Upon completion of these transactions, Mahindra will gain control of SML, and the company will become a listed subsidiary of Mahindra & Mahindra.

Strategic rationale

M&M’s acquisition is aimed at expanding its market share in the commercial vehicle segment, particularly the >3.5 tonne segment, where it currently holds only a 3% market share.

  • The acquisition is expected to double Mahindra’s market share to 6% immediately.

  • The company aims to grow its market share to 10–12% by FY31 and over 20% by FY36.

The proposed acquisition is also seen as a move to unlock synergies in operations, supply chains, product offerings, manufacturing, and talent, thereby enhancing Mahindra’s commercial vehicle play.

About SML Isuzu

  • Incorporated in 1983, SML Isuzu is a listed player in India specializing in light commercial vehicles (LCVs) and medium commercial vehicles (MCVs), including buses and trucks.

  • SML has a 16% market share in the intermediate commercial vehicle (ILCV) bus segment.

  • The company reported an operating revenue of Rs 2,196 crore and EBITDA of Rs 179 crore for FY24.

  • It has a manufacturing facility in Punjab and exports vehicles to 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. This acquisition is aligned with our capital allocation strategy for investing in high potential growth areas which have a strong right to win and have demonstrated operational excellence.”

Mr. Rajesh Jejurikar, Executive Director and CEO of Auto and Farm Sector, Mahindra & Mahindra Ltd., added:

“SML brings a strong legacy, a loyal customer base, and a credible product portfolio that complements Mahindra’s existing offerings in the trucks and buses segment. This acquisition is a pivotal step toward our ambition to become a full-range, formidable player in commercial vehicles by enhancing market coverage, unlocking operating leverage, and scaling rapidly.”

Transaction details

  • Stake acquired: 43.96% from Sumitomo Corporation and 15% from Isuzu Motors Limited.

  • Price: Rs 650 per share for both transactions.

  • Open offer price: Rs 1,554.60 per share for public shareholders.

  • Total consideration for acquisition: Rs 555 crore.

  • Completion timeline: Subject to regulatory approvals, including from the Competition Commission of India (CCI), and expected to be completed by December 2025.

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


Disclaimer: The information provided is for informational purposes only and should not be construed as investment advice. Readers are advised to consult a financial advisor before making any investment decisions. Business Upturn and the author are not liable for any losses arising from the use of this information.