Ashok Leyland may pick up majority stake in SML Isuzu

Sources aware of the deal talks say negotiations are at an advanced stage between Ashok Leyland and Japan’s Sumitomo Corporation and Isuzu.

In what could be the first major acquisition by Ashok Leyland in recent years, India’s second largest commercial vehicle maker may be close to concluding a complete takeover of SML Isuzu Limited. Sources aware of the deal talks say negotiations are at an advanced stage between Ashok Leyland and Japan’s Sumitomo Corporation and Isuzu.

Classified as a promoter, Sumitomo holds roughly 44 percent stake in the Indian unit of Isuzu, while Isuzu itself holds 15 percent.  Emails sent to Ashok Leyland and SML Isuzu remained unanswered till publishing the article. The article will be updated if either/ both the companies respond to Moneycontrol’s query.

Ashok Leyland has scheduled a conference call with investors tomorrow (March 26) at 5:15 pm to provide what it described as “ corporate updates” emanating out of the Board Meeting to be held earlier in the day called at “ shorter notice”, according to a stock exchange filing posted after market hours on  March 25.

SML Isuzu traded at Rs 1606 a piece on March 25 and its market capitalization stood at a little over Rs 2,300 crore. Sumitomo and Isuzu’s combined stakes is valued at roughly Rs 1,350 crore. “The pricing offered by Ashok Leyland may be at 10 – 15 percent premium to the last three months stock price average of the SML Isuzu,” said a person with knowledge of the deal.

(This is a developing story).