M&M to buy stake in loss making Peugeot scooter unit; stock falls over 2%
M&M said its two-wheeler unit has made a binding offer to acquire a 51 per cent stake in PSA Peugeot Citroen's scooters business.
By ET Online | Updated:
NEW DELHI: Mahindra & Mahindra Ltd slipped as much as 2.2 per cent after the automaker said that it plans to buy 51 per cent stake in PSA Peugeot Citroen's scooters business
At 10:30 a.m.; the stock was trading at Rs 1359.90, down 2.2 per cent on the Bombay Stock Exchange. It had hit an intra-day high of Rs 1400.20 and a low of Rs 1359.45 in trade so far.
"M&M acquiring 51% stake in Peugeot scooter unit is indeed positive for the company but it surely infuses some bit of uncertainty in the success of these acquisitions apart from considerable cash commitment," said A K Prabhakar, Independent Market Expert.
"M&M has a habit of buying companies with distress value and look at turning them around. After Korea Company, Ssangyong Motor they are now eyeing Europe," he added.
M&M Ltd, the country's largest utility vehicle maker, said its two-wheeler unit has made a binding offer to acquire a 51 per cent stake in PSA Peugeot Citroen's scooters business.
According to a newswire agency the scooter business of PSA has been loss making for over a decade. In 2013, it sold 79,000 vehicles which was a gain of 8.2%. The unit employs nearly 500 people in France and 300 people at a joint venture in China, said an ET report.
Back in Europe, Peugeot has been facing stiff competition from the European scooter leader Piaggio. At the end of 2012, PSA closed an engine plant for the scooter business concentrating production at a factory in Mandeure in eastern France, added the report.
" Mahindra Two Wheelers Ltd (MTWL), an unlisted subsidiary of Mahindra & Mahindra Ltd and part of the $16.5 billion Mahindra Group, has made a binding offer to acquire a 51% stake in Peugeot Motocycles (PMTC), part of the Euro 54 billion PSA Group based in France," M&M said in the filing.
The deal will involve infusion of 15 million euros ($18.93 million) into Peugeot Motorcycles to finance projects, Mahindra said in a statement issued to the National Stock Exchange. The company did not give more information about the transaction.
At 10:30 a.m.; the stock was trading at Rs 1359.90, down 2.2 per cent on the Bombay Stock Exchange. It had hit an intra-day high of Rs 1400.20 and a low of Rs 1359.45 in trade so far.
"M&M acquiring 51% stake in Peugeot scooter unit is indeed positive for the company but it surely infuses some bit of uncertainty in the success of these acquisitions apart from considerable cash commitment," said A K Prabhakar, Independent Market Expert.
"M&M has a habit of buying companies with distress value and look at turning them around. After Korea Company, Ssangyong Motor they are now eyeing Europe," he added.
M&M Ltd, the country's largest utility vehicle maker, said its two-wheeler unit has made a binding offer to acquire a 51 per cent stake in PSA Peugeot Citroen's scooters business.
According to a newswire agency the scooter business of PSA has been loss making for over a decade. In 2013, it sold 79,000 vehicles which was a gain of 8.2%. The unit employs nearly 500 people in France and 300 people at a joint venture in China, said an ET report.
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Back in Europe, Peugeot has been facing stiff competition from the European scooter leader Piaggio. At the end of 2012, PSA closed an engine plant for the scooter business concentrating production at a factory in Mandeure in eastern France, added the report.
" Mahindra Two Wheelers Ltd (MTWL), an unlisted subsidiary of Mahindra & Mahindra Ltd and part of the $16.5 billion Mahindra Group, has made a binding offer to acquire a 51% stake in Peugeot Motocycles (PMTC), part of the Euro 54 billion PSA Group based in France," M&M said in the filing.
The deal will involve infusion of 15 million euros ($18.93 million) into Peugeot Motorcycles to finance projects, Mahindra said in a statement issued to the National Stock Exchange. The company did not give more information about the transaction.
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