Mahindra & Mahindra Limited is all set to acquire the Navistar Group’s stake in Mahindra Navistar Automotives Ltd (MNAL) and Mahindra Navistar Engines Pvt. Ltd (MNEPL) soon. Following the deal, both MNAL and MNEPL would become wholly owned subsidiaries of Mahindra. Post the deal, Mahindra would be in complete charge of the operations of these companies and will continue to sell MNEPL and MNAL products.
As per the proposed transaction call, Mahindra will have to shell out approximately Rs.175 crores to acquire stakes in both the ventures. According to the deal, Navistar would continue to source components from India while Mahindra would continue to offer engineering services to Navistar. Navistar Group would continue to support M&M through a license agreement and extend necessary support to MNAL and MNEPL for the purposes of business continuity.
Throwing further light on the deal, Dr. Pawan Goenka, president, Automotive and Farm Equipment Sectors, Mahindra & Mahindra Ltd. said, “Since it was established in 2005, Mahindra Navistar Automotives Ltd. has created a niche for itself in the Indian CV industry. MNAL has set up a world class dealer and service network for trucks, which coupled with synergies with Mahindra’s dealer network gives us a significant opportunity to grow our presence in the truck market. In addition, the product has been well accepted as is evident from our high-ranking in the TNS customer satisfaction survey. M&M is committed to the success of the truck business. We acknowledge the contribution made by Navistar to this venture thus far and appreciate their support for business continuity after they exit the business.”
Troy Clarke, president and chief operating officer, Navistar further added, “While the Indian market has not expanded as we had originally expected and industry challenges there continue in the near term, we still see promise in India going forward. But given Navistar’s 2013 priorities, our capital and focus needs to be allocated to other business opportunities in the near term. Mahindra has extensive experience and knowledge of the Indian automotive sector and they are best situated to devote the time and resources required to capitalize on future opportunities in India.” Navistar and Mahindra ventured into the MNAL joint venture in late 2005. Navistar International Corporation (NYSE: NAV) is a holding company whose subsidiaries and affiliates offers commercial and military trucks, diesel engines, school and commercial buses, and recreational vehicles.