Indian vehicle major sells its 14.04% to Japan’s Sumitomo.
Utility vehicle major Mahindra & Mahindra (M&M) today informed the Bombay Stock Exchange (BSE) of its decision to sell its 14.04 stake in Punjab-based commercial vehicle manufacturer Swaraj Mazda to Sumitomo Corporation of Japan. Sumitomo holds a 39.49 per cent stake in Swaraj Mazda. M&M acquired the stake in Swaraj Mazda when it acquired Punjab Tractors in 2007.
Once the acquisition is completed on January 6, 2009, subject to share transfer agreement, Sumitomo's stake in Swaraj Mazda will go up to 53.43 per cent. An executive at Swaraj Mazda said this acquisition by Sumitomo, at Rs 272 per share, does not trigger an outright takeover.
Punjab Tractors and Sumitomo Corporation together hold 53.53 per cent in Swaraj Mazda, and the balance is held by mutual funds, FIIs and the public.
Japan's Mazda was the first joint venture partner with the company and exited the partnership in 1984. The company continues to use the Mazda name on goodwill without paying any royalty. Isuzu Motors is the technology partner for Swaraj Mazda.
The company in order to raise funds for its expansion planned a rights issue last year. “The general cautious sentiment in the stock market and a steep drop in demand for commercial vehicles has forced us to postpone the rights issue. We'll re-enter the market once demand picks up,” says Yash Paul Mahajan, MD, Swaraj Mazda. Along with his family, Mahajan's stake in the company is less than 1 per cent.