Mahindra & Mahindra to Acquire Majority Stake in SML Isuzu for $65 Million to Strengthen Position in India’s Truck and Bus Market
April 26, 2025 - Mahindra & Mahindra Ltd (M&M) is a major Indian player in the automotive and tractor industries. It has revealed a strategic move to take control of SML Isuzu Ltd., a prestigious truck and bus manufacturer, through a majority purchase of 58.96%. The deal values at INR 5.55 billion ($65 million approximately) and signifies a major move by Mahindra towards expanding its commercial vehicle business aggressively.
This deal is going to improve Mahindra's footprint in the truck and bus industry, which is vital to the growing Indian economy. After the agreement, Mahindra's share in the truck and bus business will rise from 3% to 6%, with a vision of reaching a target of 10-12% by financial year 2031 and more than 20% by 2036. This expansion is part of Mahindra's grand strategy of building a stronger presence in the >3.5-ton commercial vehicle (CV) segment, which it currently has a modest 3% market share in.
The deal entails Mahindra purchasing the full 43.96% stake of the promoter Sumitomo Corporation and a 15% stake of Isuzu Motors Ltd. Mahindra will also make a mandatory open offer for up to 26% of the residual shares, as per the regulatory norms prespecified by the Securities and Exchange Board of India (SEBI). The acquisition price per share of the stake is fixed at INR 650, which is considerably lower than the closing price per share of SML at INR 1,773.4 on the last trading date, a discount that is partially attributable to the rumored deal.
Strategic Synergies and Future Growth
SML Isuzu, which was founded in 1983, is a listed company that has a strong brand presence and extensive operations in India's truck and bus market. The company has a leading position in the intermediate light commercial vehicle (ILCV) bus market with around 16% market share. In financial year 2024, SML Isuzu posted operating revenue of INR 2,196 crore and an EBITDA of INR 179 crore, highlighting its profitable business, robust manufacturing operations, and engineering prowess.
The strategic purchase of SML Isuzu will provide Mahindra with considerable synergies, such as possible cost savings, better product offerings, increased network coverage, and operating efficiencies. The synergies will be able to enable better manufacturing capabilities, easier access to new markets, and improved brand strength. In addition, Mahindra plans to use its own technological prowess and innovation in the commercial vehicle segment to augment SML's offerings, ultimately producing a more competitive and comprehensive range of products.
Corporate Leadership Insights
Group CEO & Managing Director of Mahindra & Mahindra, Dr. Anish Shah, pointed out that this acquisition is a milestone in the company's vision to achieve exponential growth in its emerging business segments. He noted that the acquisition is in line with Mahindra's capital allocation strategy, which involves investing in high-growth potential areas with a high competitive advantage and established operational excellence. Dr. Shah stated, "This deal further solidifies Mahindra's leadership in the commercial vehicle segment through synergies that will play a part in our long-term growth strategies."
Mahindra & Mahindra's Auto and Farm Sector Executive Director and CEO Mr. Rajesh Jejurikar also shared similar views, expressing that SML Isuzu's acquisition will make Mahindra a complete player in the commercial vehicle segment. He added that the combination of SML's solid heritage, loyal customer base, and established product portfolio will add to Mahindra's current offerings in the truck and bus space. "This acquisition is a strategic milestone towards our vision to become a full-range, strong player in the commercial vehicle space," Jejurikar said.
By integrating their strengths, the two organizations aim to achieve higher operating leverage, increased market coverage, and optimized plant utilization, thereby achieving profitable growth. The alliance will form a compelling combination of technology, innovation, and product superiority in the commercial vehicle business and enable Mahindra to realize its aggressive market share targets.
Next Steps and Regulatory Approvals
The transaction, including the open offer to public shareholders, is subject to regulatory approvals, including clearance from the Competition Commission of India (CCI). The deal is expected to be completed within 2025, in line with the requirements of SEBI’s takeover regulations. Financial advisory services for Mahindra & Mahindra in this deal are being provided by Kotak Investment Banking, which is also managing the open offer. Mahindra is receiving legal services from Khaitan & Co.
About Mahindra Group
Established in 1945, Mahindra Group is a multinational group of companies having a strong presence in a range of industries like automotive, agricultural equipment, information technology, and financial services. The group has operations in over 100 countries and has more than 260,000 employees globally. Mahindra is the volume leader in tractors globally and the leader in the Indian utility vehicle business. The group has also gained considerable traction in renewable energy, logistics, real estate, and other businesses. Mahindra aims to bring positive change to the lives of communities and stakeholders through its initiatives of rural prosperity, sustainable operations, and urban living.
About Sumitomo Corporation
Sumitomo Corporation is a Japanese integrated trading and investment conglomerate with an international network covering 125 offices in 64 countries. With around 900 subsidiaries and affiliates, the activities of the company vary from steel, automotive, and transportation systems to chemicals, digital media, and energy conversion. Sumitomo Corporation continues to adhere to its time-tested business philosophy of enriching people's lives and contributing to society through its multifaceted operations.
This strategic buy is a landmark moment for Mahindra as it looks to considerably grow its footprint in India's fast-growing commercial vehicle space. The acquisition not only bolsters Mahindra's market position but also unlocks a large number of synergies that will be beneficial for the company in the long term. As Mahindra keeps on driving growth in important emerging markets, this acquisition is an important step towards its overall vision of sustainable success in its diversified business units.
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