Sep 09, 2015
Mahindra & Mahindra Ltd, India’s largest utility vehicle maker, is close to buying debt-laden Italian car designer Pininfarina SpA, as per a report in Bloomberg. The deal between the two companies, which was pending for months now, is expected to close in the next few days.
Mahindra started negotiations with Turin-based Pininfarina’s for a buyout early this year, but the talks between the two stalled over pricing issues and issues related to the designer’s debt. To expedite the buyout process, the Indian auto company is also expected to meet Pininfarina’s bankers next week.
Pininfarina has been reeling under the debt for the past several years, and reportedly even shut a floundering division that built cars for other manufacturers three years ago. But, the company is optimistic that a new investor will provide financial solidity and bolster growth in coming years.
The designer has already been working with Mahindra on a couple of its SUV projects including TUV300 compact SUV, which is expected to hit the market soon.
Established in 1930, Pininfarina has also been involved in making cars like Rolls-Royce Camargue, Cadillac Allante, Maserati Quattroporte as well as classics such as the Ferrari 250 GT and Alfa Romeo Giulietta Spider. It has also diversified into business like apartment towers, vending machines and toothbrushes.
The designer reported a net loss of 4.4 million euros in the half-year ending June, in line with the previous year, and its net debt stood at 52.7 million euros, up from 44.8 million euros at the end of December last year.
Shares of Pininfarina surged more than 20 per cent before being suspended from trading, while Mahindra shares traded up 3.1 per cent on BSE at the time of close on Tuesday.
The acquisition of Pininfarina will follow two other deals clinched by Mahindra in the auto space including that with South Korean carmaker Ssangyong and the scooter unit of French auto manufacturer PSA Peugeot Citroen in the last one year. It will further strengthen Mahindra’s presence in the global market even as its sales continue to slump in the domestic market.
Mahindra and Mahindra sold 14,198 passenger vehicles, in August, 7 per cent less than what it sold in the same month a year ago. The company is hoping to recover volumes in the utility vehicle market with several new launches, starting with the TUV300 this month.
Source: DEALSTREETASIA