Tech Mahindra, the software services arm of conglomerate Mahindra & Mahindra, has entered into an agreement with Pincar SrL to acquire a controlling stake in iconic Italian automotive design firm Pininfarina, which has designed cars for Ferrari, Maserati, Rolls-Royce and Cadillac.
As a part of the deal, Tech Mahindra and parent Mahindra & Mahindra will purchase 76.06% shares of Pininfarina from the current controlling shareholder Pincar for €1.1 (Rs 81.4) per share or about €25 million (Rs 184 crore). This investment will done via a joint venture company, which will be 60% owned by Tech Mahindra and 40% by M&M, Tech Mahindra said in a statement on Monday.
This will be followed by an open offer for all the remaining ordinary shares of Pininfarina at the same price (€1.1/share). A rights issue to infuse funds into the design house will also be executed before the end of 2016, Tech Mahindra said. Mahindra will also reportedly provide a guarantee to creditors of €114.5 million.
Pininfarina has made losses for years and has debt of around €50 million.
“Pininfarina will add enormous value to Tech Mahindra’s portfolio of engineering services. But just as important is the fact that the legendary high-end design credentials of Pininfarina will significantly enhance the design capabilities of the entire Mahindra group,” said Anand Mahindra, chairman of Mahindra Group.
Apart from cars, Milan-listed Pininfarina also designs buildings, interiors and electronics.
“Adding Pininfarina’s design skills to our integrated engineering solutions enables a strong entry into automotive styling, design and development and reinforces our body engineering capabilities,” said CP Gurnani, CEO and MD of Tech Mahindra.
Pininfarina’s 25-year design expertise in industries beyond automotive will give Tech Mahindra “winning edge” in areas such as aerospace, consumer electronics, architecture and transportation, where it already has a strong footprint, added Gurnani.
Mahindra and Pininfarina have already worked together in the past on the Halo electric sports car concept, which M&M had showcased at the Delhi auto expo in 2014.
M&M has been known to acquire iconic but distressed, undervalued companies. In 2010, it acquired South Korea’s ailing sports utility vehicle maker Ssangyong for about $463 million at that time. In 2014, it acquired a 51% stake in Peugeot Motorcycles, part of France-based PSA Group.