Mahindra to buy out Kirloskar Oil stake in Swaraj Engines: report
25 Sep 2009
Mahindra to buy out Kirloskar Oil stake in Swaraj Engines: report
Utility vehicle maker and India's largest tractor maker Mahindra & Mahindra (M&M) is planning to acquire a 33.2 per cent stake in Swaraj Engines to consolidate its stake and expand the diesel engine business.
The company has a 14 per cent stake in Swaraj Mazda through its acquisition of Punjab Tractors in 2007, according to media reports.
Swaraj Engines, a 23-year-old company, manufactures diesel engines for Swaraj Tractors. Kirloskar Oil Engines, which is in technical collaboration with the company, holds a 17.39 per cent stake in it. M&M is in talks to buy out KOE stake.
According to sources familiar with the development, M&M is pursuing bigger plans for the engine business and the acquisition would help the group leverage Swaraj Engines. The deal would happen soon, sources added.
Analysts say an acquisition of the 17.39 per cent stake by M&M would trigger an open offer as per Sebi guidelines.
According to another source, the sale of stake by KOE would help the company focus on its own business.
M&M earlier this year sold its 14 per cent stake in LCV maker Swaraj Mazda to Japanese co-promoter Sumitomo for Rs40 crore. With the acquisition, Sumitomo upped its stake to 53.5 per cent from 39.5 per cent. M&M sold the stake as it had plans to develop commercial vehicles in a joint venture with US truck major International Truck & Engine Corporation.