Mahindra acquires 75.1% in Turkish farm equipment maker Hisarlar
20 Jan 2017
Mahindra & Mahindra Ltd (M&M) today announced the acquisition of Hisarlar Makina Sanayi ve Ticaret Anonim Sirketi (Hisarlar), a farm equipment company based in Turkey, thereby expanding its global reach.
Under the agreement, Mahindra will acquire a 75.1 per cent equity stake in Hisarlar. Of the balance shares European Bank for Reconstruction and Development (EBRD) will hold 18.7 per cent and the founding Turker family will hold the remaining 6.2 per cent.
Further, as part of the transaction, Darby Converging Europe Fund III will exit its investment. The transaction is expected to close by April 2017
Mumbai-based Mahindra Group said the association will help it grow the farm equipment business in Turkey and Europe.
Commenting on the development, Dr Pawan Goenka, managing director, Mahindra & Mahindra Ltd, said, "Mahindra is the world's No 1 tractor company by volume, with an on ground presence in India, USA, China and Japan, besides many other export markets. Our strategy going forward is to globalise aggressively and also expand our portfolio to include various new categories of farm machinery. This acquisition is an important milestone in our globalisation journey."
Rajesh Jejurikar, president and chief executive, Farm Equipment & Two Wheeler, M&M Ltd, said, "Hisarlar is a market leader with 45 per cent market share in soil preparation equipment in Turkey. The acquisition of Hisarlar will enable Mahindra to expand its footprint in Turkey and Europe, making this entity a global manufacturing base for various farm implements and tractor cabins".
Hisarlar, incorporated in 1977, is a key player in the agriculture machinery industry, tractor cabins and components for off highway machinery.
The company has been owned primarily by the Turker family with equity participation from Darby, a private equity fund which is part of the Franklin Templeton Group, and the European Bank for Reconstruction and Development (EBRD), a leading institutional investor in Turkey.
The company reported revenue of 208 million Turkish Lira in 2015. Exports constitute around 35 per cent of its sales. The company has two production facilities in western Turkey and employs a total of about 820 people.
Hisarlar is the leader in the soil preparation category of implements with a 45 per cent market share in Turkey. The company has strong brands in this segment, supported by a distribution network of 85 dealers across Turkey.
Besides agricultural machinery, the company manufactures tractor cabins and industrial components. Turkey is the largest tractor market in terms of production and sales within Europe. During the period 2009-15, on an average, the tractor market stood at 48,450 units. Turkey also has a 3 per cent market share in the agri-machinery industry globally. Agricultural mechanisation in Turkey is growing and the country is also an important market for combine harvesters.
Apart from some imports in harvesters, farm equipment demand in Turkey is primarily met from domestic production. In addition, a significant proportion of agricultural equipment manufactured in Turkey is exported to Central Asia, the Middle East and Africa.
Mahindra & Mahindra Ltd. will invest 71 million Turkish Lira (equivalent to around $19 million at an exchange rate of 3.80 Turkish lira per dolar) in Hisarlar as fresh equity infusion into the company, which will give M&M Ltd. a 75.1 per cent equity stake.
Mahindra will have majority in the board and control the management of Hisarlar, post its investment into the company. As part of the transaction, EBRD is increasing its shareholding to 18.7 per cent, and will be entitled to nominate a board director, with the founding Turker family retaining a 6.2 per cent stake.