Mahindra Ugine, Mahindra CIE surge as Bombay High Court approves merger

MUMBAI: Mahindra Ugine and Mahindra CIE Auto jumped 20 per cent each on Monday — the highest possible trading limit of the day — after the Bombay High Court approved their merger and other subsidiary companies. Mahindra CIE Automotive surged to Rs 218.75 and Mahindra Ugine closed at Rs 558.30 on Monday. The swap ratio for the merger is 2.84. This means Mahindra Ugine shareholders will get 284 Mahindra CIE shares for every 100 Mahindra Ugine shares.

Since their merger announcement in June 2013, these stocks have outperformed the market. Mahindra CIE’s stock has gained nearly 390 per cent in the period, while Mahindra Ugine has surged 1,253 per cent. In June 2013, Mahindra Group agreed to merge its five listed and unlisted subsidiaries and later sell a stake in the combined entity to CIE Automotive for ¤100 million. In exchange, using the proceeds, M&M will buy 13.5 per cent in CIE Automotive.

ICICIdirect.com, in its report on Mahindra CIE in April, had said, "We feel MCI provides a rare, unique Indian auto component play, which has a global footprint with global promoters along with massive turnaround possibilities in the company."