Mahindra Ugine, Forgings hit 52-wk high on deal with CIE
M&M is merging all its auto components businesses into Mahindra Forgings, which will be renamed Mahindra CIE Automotive, where Spain's CIE will hold majority stake. The deal will help M&M scale its auto components business and bring additional expertise and enhanced product portfolio.
June 17, 2013 / 14:03 IST
Moneycontrol Bureau
Shares of Mahindra & Mahindra and units Mahindra Ugine Steel, Mahindra Forgings rose between 2-10 percent on Monday following the company's auto component business deal with Spain's CIE Automotive SA.In a complex deal announced on Saturday, M&M will merge all its auto components businesses into Mahindra Forgings. Mahindra Forgings will be renamed Mahindra CIE Automotive, where the Spanish auto components maker will hold 51.1 percent and Mahindra 20.2 percent. The remaining stake will be with shareholders, institutional and public.Mahindra will use the proceeds from the stake sale in its subsidiaries to buy 13.5 percent stake in CIE, at 6 euro a share, a small premium to its Friday's close of 5.57 euro.Investment Bank Morgan Stanley says there are a number of key long-term benefits from this deal."The alliance will make M&M a global player in the auto components business. The new entity will have scale under CIE management, access to new geographies, an enhanced product portfolio, and additional technical expertise in the auto components business," Morgan Stanley said.It estimates the transaction will lead to a cash outflow of Rs 65 crore for M&M.At 9:35 hrs, M&M was up 2.1 percent at Rs 968.95 on NSE. Mahindra Ugine Steel was at the 10 percent upper circuit of Rs 71.75 and Mahindra Forgings was up 2 percent at Rs 68.20. Mahindra Forgings had hit a 52-week high of Rs 72.90 earlier in the session.
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