Pipavav Defence rallies over 16% on acquisition buzz by M&M

NEW DELHI: Pipavav Defence & Offshore Engineering Company Ltd rallied as much as 16.34 per cent in trade on Thursday, after media reports suggested that Mahindra & Mahindra will purchase a majority stake in Pipavav Defence for roughly Rs 3,000 crore at Rs 66 a share in a three-phase deal, two people with direct knowledge of the plan said.

Along with debt of around Rs 6,800 crore and fresh equity that will be issued, the deal is seen as having an enterprise value of Rs 12,000 crore, ET reported quoting sources.

At 09:40 a.m.; Pipavav Defence was trading 15.09 per cent higher at Rs 73.60. It hit a low of Rs 67 and a high of Rs 74.40 in trade today.

In the first phase, Mahindra Defence Systems (MDS), which supplies various types of launchers for ships, along with systems and components to customers other than the Indian Navy, will purchase a 19% stake in Pipavav Defence from the founders, Chairman Nikhil Gandhi and his younger brother and Managing Director Bhavesh Gandhi, who own about 45% of the company.

The Mahindra Group's public relations agency said it didn't comment on market speculation. A Pipavav Defence spokesperson declined comment.

ET was the first to report on February 5 that Mahindra, India's largest motorcycle maker Hero Group and French shipbuilder DCNS had started talks separately with the Gandhis to purchase a controlling stake in the company that has facilities to build warships, submarines and LNG carriers.