Mahindra & Mahindra, World's largest tractor maker by volumes on Thursday signed a definitive agreement to acquire 33% stake in Mitsubishi Agricultural Machinery Co. for 25 million dollars or Rs 159.24 crore, said the company in a statement to Bombay Stock Exchange on Thursday
Mahindra & Mahindra will acquire 33% voting stake in the subsidiary of Mitsubishi Heavy Industries through fresh issue of common shares and Class A (non-voting) shares of Mitsubishi Agri Machinery. The deal is likely to be closed by 1st of October 2015 with the funds infused by Mahindra will go in expanding the capital base of the Japanese company.
Garnering revenues of $408 million in FY-15, Mitsubishi Agricultural Machinery is a full range agri machinery company producing and selling tractors, combines harvesters, rice transplanters and other agri-machinery products.
The association of Mitsubishi Agricultural Machinery with Mahindra is not new, the Japanese company has been supplying tractors to Mahindra USA as well as providing technical license to Mahindra for walk-behind rice transplanters and new tractor in India.
The agreement was signed between Rajesh Jejurikar, president & chief executive of farm equipment and two wheeler division of Mahindra & Mahindra and Kazuaki Kimura, president and CEO of Mitsubishi Heavy Industries and Katsumi Tottori, president of Mitsubishi Agricultural Machinery
The acquisition is win-win for the agricultural machinery businesses of both companies, says Jejurikar.
"This will enable strategic growth avenues for Mitsubishi Agricultural Machinery through Mahindra USA, China and other international markets, thereby speeding up international expansion."
The tie-up will also provide platform for both companies to leverage technology and product development synergies.
The new partnership will help both companies to jointly develop products and address global opportunities in the tractor and agri-machinery space. In addition, the partnership will enable both the companies to improve cost competitiveness through joint sourcing and optimising the supply chain.
Kazuaki Kimura, president and CEO of Mitsubishi Heavy Industries, Machinery, Equipment & Infrastructure says the signing up of new agreement will build upon good relationships, which both companies have shared over decades and it will open up "new horizon for business globally".