Mahindra & Mahindra (M&M) has decided to exit from light commercial vehicle manufacturer Swaraj Mazda Ltd (SML) and would sell its 14.04 per cent stake to Japan’s Sumitomo Corporation for Rs 40 crore.
The decision follows M&M’s plan to merge Punjab Tractors Ltd (PTL) with itself in October.
M&M’s holds its stake in Swaraj Mazda is through PTL. M&M is the company’s co-promoter, whereas Sumitomo is the principal promoter, which holds a majority 39.49 per cent stake.
“The company has entered into a memorandum of understanding dated December 30, 2008 with Sumitomo Corporation, Japan, expressing its intention to sell 14,72,000 equity shares in Swaraj Mazda Ltd to Sumitomo-Corporation, Japan,” PTL said in a statement field with the Bombay Stock Exchange.
The price for the proposed acquisition would be Rs 272 per share and the date of the proposed acquisition by Sumitomo Corporation, Japan would be January 6, 2009, the statement said.
The transaction is subject to successful conclusion of the share transfer agreement.
M&M officials could not be contacted immediately for comments over the development.
Other prominent shareholders of SML include CDC Financial (9.28 per cent), Reliance Capital (7.89 per cent) and Actis (7.74 per cent),
After the acquisition Sumitomo will hold 53.52 per cent stake in SML.
M&M had acquired 64.64 per cent stake in Punjab Tractors in March last year for over Rs 1,400 crore.