Tech Mahindra set to acquire Italian car design company Pininfarina

MUMBAI: Tech Mahindra, a listed subsidiary of Mahindra & Mahindra, has agreed to acquire Italian car designer Pininfarina SpA, which has designed cars for Ferrari, Maserati, Rolls-Royce and Cadillac.

The deal size is not known.

The acquisition of Pininfarina by the Indian conglomerate has been a matter of speculation for the past two years. Senior executives of the Italian car design firm have said before that Mahindra was a strong suitor.

Those tracking the deal were surprised that the acquisition is being made through Tech Mahindra, rather than parent Mahindra & Mahindra, which makes SUVs, tractors and other vehicles.

The move to use Tech Mahindra as the vehicle to acquire Pininfarina is significant, as it better enables the Italian car design firm to retain its distinctive character, which may have been lost had M&M acquired it, experts said.

Rivals in India and overseas may not have been too comfortable dealing with Pininfarina, if it was an M&M subsidiary. Also, Tech Mahindra may have synergies to offer in terms of design software, they said.

A Reuters report last week cited a senior executive at Pininfarina as saying that talks were ongoing.

“Negotiations between controlling shareholder Pincar, creditor banks and Mahindra... over the acquisition of Pininfarina's shares owned by Pincar and debt restructuring never broke off," the person was cited as saying.

Pininfarina has been making losses for years and its net debt stood at 52.7 million euros ($57 million) at the end of June.