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Mahindra Two Wheelers To Acquire 51% Stake In Peugeot’s Scooter Unit

Source: VC Circle

Early this year Samena Capital acquired minority stake in Mahindra Two Wheelers.

October 7, 2014 

Indian automobile major Mahindra and Mahindra Ltd’s two-wheeler unit Mahindra Two Wheelers Ltd (MTWL) has agreed to acquire 51 per cent equity stake in France-based PSA Peugeot Citroen’s scooter business, as per a stock market disclosure.

As part of the binding agreement between the two companies, the deal would involve an infusion of around $18.93 million into Peugeot Motocycles to finance projects implemented through the strategic partnership, and further sale of shares by PSA which would allow Mahindra Two Wheelers to pick a 51 per cent equity stake in the European firm, the disclosure showed.

The company did not reveal further details about the transaction, which is subject to Works Council consultation, as part of the employee dialogue process and anti-trust law.

Currently, MTWL is a small player in the Indian two-wheeler market and facing stiff competition from bigger players like Hero MotoCorp, Bajaj Auto, Honda Motorcycle & Scooter and TVS. The stake acquisition is expected to pave way for Mahindra to enter new markets, provide access technologies to develop new products and boost its presence in the market.

Peugeot offers a range of scooters and mopeds from 50cc to 400cc, including the successful three wheeled scooter ‘Metropolis’, in the European market.

“The coming together of Mahindra & Peugeot is a win-win for the two-wheeler businesses of both companies. Mahindra would offer access to the India market, mass market product technology and competence in marketing while Peugeot brings primium range, a strong European footprint, and a globally recognized brand. This partnership would enable both MTWL and PMTC to speed their international expansion by driving synergies and leveraging respective strength of both parties,” M&M’s executive director Pawan Goenka said in the statement.

The company recently launched a new scooter called the Gusto, which is also aimed at export markets in South Asia, Central America and Africa.

Mahindra & Mahindra entered the two-wheeler segment in 2008 by acquiring 80 per cent in the business assets of Kinetic Motor, which retained 20 per cent in the business of the new joint venture. With further cash infusion M&M’s holding moved up.

Early this year PE firm Samena Capital acquired Kinetic’s minority stake in the company for Rs 182.1 crore ($29.4 million).