Mahindra and Mahindra and Tech Mahindra to jointly acquire Italian car design company Pininfarina. Both the companies will first form a special purpose vehicle (SPV) and together will acquire 76.06 percent stake in the company.
Pininfarina designs cars for Ferrari, Maserati, Rolls-Royce and Cadillac.
Speaking exclusively about the deal to CNBC-TV18, Vineet Nayyar, Vice Chairman, Tech Mahindra says the company will have management control of Pininfarina and that they will bear the corporate guarantee of 114.5 million euros that has to be given to the Pininfarina's lenders.
Out of the 76.06 percent stake, Tech Mahindra will hold 60 percent and M&M will hold 40 percent. The two companies will invest 25.3 million euros in the same proportion to buy 76.06 percent sake in the Italian company. The SPV will then make an open offer to public shareholders of Pininfarina for the remaining 23.94 percent stake and also do a rights issue worth 20 million euros. The deal also involves a debt restructuring deal for Pininfarina -- as a part of which M&M and Tech Mahindra will provide corporate guarantee of 114.5 million euros to Pininfarina's lenders.
Nayyar is hopeful that the acquired company will bring in designing capabilities, engineering capabilities and other synergies for Tech Mahindra.
He also said that although M&M will remain their preferred client, they will also work for other companies that Pininfarina was working for.
He expects the company to turn EPS accretive after four quarters.For the full interview, watch video
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