Mumbai: Utility vehicle maker Mahindra and Mahindra has beaten heavy vehicles major Ashok Leyland to clinch a deal to acquire 43.5-per cent stake from private investors in Punjab Tractors Ltd.

The acquisition help M&M increase its share in the domestic farm equipment market to 40 per cent from the existing over 30 per cent. Its closest rival, Chennai-based Tafe, controls nearly 23 per cent market share.

Mahindra & Mahindra acquired Punjab Tractors Ltd (PTL) in an all cash deal, under which it would be pay Rs360 for every PTL share, a premium of 18.4-per cent to the previous closing market price (CMP) of Punjab Tractors.

On Tuesday, Ashok Leyland's cash offer of Rs345-350 a share was ahead of M&M's Rs335 offer. However, on Wednesday, the M&M board cleared a revised price of between Rs355-360. This takes the Punjab Tractors (PTL) valuation to Rs2,160 crore.

But the Punjab government is not convinced of the transparency of the deal and has threatened to launch a probe into the disinvestment of the firm by its predecessor.

M&M would get control after an open offer for a further 20 per cent to shareholders. However, even at Rs360 a share, the bid price is lower than the Rs400 per share that Actis had initially talked about.

With the promise of an additional 10 per cent market share in key rural areas of Punjab, Haryana, UP and Rajasthan, M&M has clearly bagged the PTL deal. This would meet the company's need to expand capacity without a greenfield investment, and the gestation lags that go with it.

A source close to the development said the deal could be signed in the next few hours and the Rs360 per share price has been agreed upon.

Dabur Group promoter Mohit Burman, whose 14.5-per cent holding in PTL is part of the stake being sold, declined to comment. Private equity firm Actis holds 29 per cent in the tractor company.

Meanwhile, a Punjab government spokesman said the government would consider launching a probe into the privatisation of PTL by the previous Amarinder Singh government and warned that whosoever was bidding for the company was doing so at their own risk.

PTL was initially courted by a number of potential suitors, but Sonalika, the Tata Group in partnership with New Holland Tractors, Tafe and Escorts had reportedly pulled out of the race citing overvaluation of the acquisition target, which is understood to have an order book worth Rs500 crore.