Mahindras to buy 51% in Peugeot Motocycles for euro 28 mn

Mahindra Two-Wheelers, a fringe player in the domestic market, today signed a pact to acquire 51 per cent stake for euro 28 million (about 217 crore) in Peugeot Motocycles, part of the euro 54 billion French auto major PSA Group.
"Under the binding offer, Mahindra Two-Wheelers would infuse 15 million euros into Peugeot Motocycles to finance projects implemented through strategic partnership, and further sale of shares by PSA, which would allow us to take 51 per cent stake in Peugeot Motocycles," M&M executive director Pawan Goenka told reporters here.
Mahindras will also invest another euro 13 million at a later stage. The transaction is subject to the Works Council consultations as part of the employee dialogue process and anti-trust law, he said, but added that "we hope to close the deal in three months".

Peugeot is well known for its four and two-wheelers in Europe and is the world's oldest two-wheeler maker. However, its two-wheeler business has been undergoing a trunaround.
In a statement, Peugeot Scooters Managing Director Frederic Fabre said: "The strategic partnership with the Mahindra & Mahindra Group will give us the opportunity to accelerate our geographic expansion. These are all opportunities to secure the future of Peugeot Scooters and give a future industrial site Mandeure."
Mahindras will continue with the current management.

Replying to a query on full control, Goenka said: "Our focus is continuity on majority stake and we are not thinking going beyond 51 per cent now."

The loss-making Peugeot Motocycles employs 500 people and produces about 25 per cent of the firm's scooters, mainly high-end models in French unit. Its Chinese plant employs 300 people and produces 65 per cent of Peugeot Scooters' volume. The remainder is produced in Taiwan.
Mahindra will not do any restructuring in PMTC for two years post the deal, Mahindra Two-Wheelers chief executive Rajesh Jejurikar said.
Mahindra would offer access to the India market, mass market product technology and competence in marketing while Peugeot brings premium range, a strong European footprint, and a globally recognised brand.
Mahindras would support the French company's global growth plan and the brand building effort that enriches the "Frenchness" of the Peugeot brand. PSA would support the Brand and growth strategy by holding a minority share for a long term, Jejurikar said.