Mahindra looks to boost share in over 3.5-tonne truck, bus segment with SML Isuzu acquisition
Utility vehicle maker Mahindra and Mahindra is acquiring truck and bus maker SML Isuzu as the homegrown maker of Scorpio SUV and Bolero pick-up aims to boost its share in the truck and bus business.
As a part of the deal, Mahindra will acquire a 58.96 per cent stake in SML Isuzu for ₹555 crore or ₹650 per share. It is acquiring the entire stake of 43.96 per cent held by Sumitomo Corp, the promoter of SML and a 15 per cent stake held by Isuzu Motors.
Mahindra will also launch a mandatory open offer for acquiring up to 26 per cent stake from public shareholders of SML in accordance with market regulator SEBI's takeover regulations.
"This acquisition is a pivotal step toward our ambition to become a full-range, formidable player in commercial vehicles by enhancing market coverage, unlocking operating leverage through platform consolidation, a unified supplier and network base, and better plant utilization," said Rajesh Jejurikar, executive director and CEO of auto and farm sector at Mahindra.
Mahindra dominates the less than 3.5-tonne light commercial vehicle segment, where it has a 52 per cent share. However, in the above 3.5-tonne CV segment, where the likes of Tata Motors and Ashok Leyland have a large presence, Mahindra's share is only 3 per cent.
SML Isuzu's acquisition will double the market share to 6 per cent, and Mahindra plans to increase this to 10 to 12 per cent by the financial year 2031 and to more than 20 per cent by FY2036.
SML Isuzu, incorporated in 1983, is a listed company and reported operating revenue of ₹2,196 crore and EBITDA (earnings before interest, taxes, depreciation and amortization) of ₹179 crore in the 2023-24 financial year. It had a market-leading position in the ILCV (intermediate light commercial vehicle) buses segment with around 16 per cent share.
"The acquisition of SML Isuzu marks a significant milestone in Mahindra Group's vision of delivering 5x growth in our emerging businesses. This acquisition is aligned with our capital allocation strategy for investing in high potential growth areas which have a strong right to win and have demonstrated operational excellence," said Anish Shah, group CEO and MD of Mahindra Group.
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