Synopsis:
Mahindra & Mahindra has acquired a 59% stake in SML Isuzu and announced an open offer, but with no tender date yet. Many investors might decide to keep their shares because the current market price is significantly higher than the offer price.
An unexpected move in the commercial vehicle industry is drawing notice! One of the biggest automakers in India has already purchased the majority of a well-known mid-sized truck and bus manufacturer.
Even though an open offer was announced back in April, the tender date is still unknown. In this article, let’s dig deep for detailed insights into the company, its strategic plans following the acquisition, and the implications of the open offer.
With a market capitalization of Rs. 3,84,344 crores, Mahindra & Mahindra Ltd is trading at Rs. 3091, down by 2.25 percent from its previous day close of Rs. 3162.40
About the deal
As per the announcement on 26 April, 2025, Mahindra & Mahindra had acquired a majority stake of SML Isuzu ltd.The deal involved M&M purchasing 63,62,306 equity shares, or 44 percent of stake, from SML promoter Sumitomo Corporation for Rs. 650 per share, for a total consideration of Rs. 413.55 crores.
Furthermore, M&M paid Rs. 650 per share, or Rs. 141.10 crores, to Isuzu Motors Limited, a public shareholder of SML, for 21,70,747 equity shares, or a 15 percent stake. Therefore, it has a total stake of 59 percent in the company.
According to the Sebi regulation, an acquirer must make an open offer to the public shareholders if they purchase a sizable stake (typically 25 percent or more) in a listed company or take control of it.
This guarantees that shareholders are treated fairly and gives them the choice to sell their shares at a predetermined price if they decide they do not want to remain invested under the new ownership.
So. The company has given a public offer to purchase up to 37,62,628 equity shares or 26 percent of SML’s equity share capital from public shareholders for a price of Rs. 1,554.60 per share. But, till date the company has not announced any specific date of offer.
Current Market Scenarios
Following the announcement of this deal, the shares of SML Isuzu Ltd, which were trading at Rs. 1596 in April, doubled in value and are now trading at Rs. 3029. Now the question arises whether the existing shareholders are ready to sell their part of the shares at the previous offer price, as the shares have more than doubled and are below the offer price.
Because of these circumstances, M&M might reconsider its offer price to acquire stake from the public, as those who will be willing to sell their part of shares at a 50% discount, so let’s look out for an update from their side and see what unveils.
Company’s Strategy
Mahindra & Mahindra (M&M), known for its pick-up trucks in the 2–3.5 tonne range, has taken a strategic step by acquiring SML Isuzu, a company that operates in the 6.5–9.5 tonne commercial vehicle segment.
As a result, M&M’s market share in this segment will double to 6 percent with a target of reaching 10–12 percent by FY2031 and over 20 percent by FY2036. The acquisition aligns with M&M’s strategy of investing in high-growth potential areas.
Written by Akshay Sanghavi
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