M&M to acquire Peugeot Citroen's scooter unit

Mahindra & Mahindra is all set to acquire the scooter unit of Peugeot Citroen, in a sign of a  renewed phase of international expansion for the Indian group's struggling two-wheeler division.

India's third-largest automaker by sales today said it would buy a 51-per cent stake in Peugeot Motorcycles, the loss-making motorcycle unit of the ailing French automaker.

It said in a statutory filing with the exchanges, "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

Mahindra, without disclosing the price said the deal involved a €15-million injection into the company, which also goes by the name of Peugeot Scooters.

The move forms part of a wider turnaround plan at the company, Europe's second-largest carmaker by sales, which saw a return to profitability under chief executive Carlos Tavares in June for the first time in three years.

Mahindra described Peugeot's division as ''the oldest motorised two-wheeler manufacturer in the world'', and ''a key player in urban mobility in Europe for 116 years''.

Under the deal, PSA would sell shares in Peugeot Motorcycles to allow Mahindra own a 51 per cent stake in the scooter unit.

Mahindra is India's leading SUV and tractor maker. In 2008 it entered the two-wheeler segment through the acquisition of Pun-based Firodia Group two-wheeler maker Kinetic Motor Co (See: M&M in aquisition deal with Kinetic Motors).

The purchase of the majority stake in Peugeot Motorcycles would boost the presence of Mahindra in the two-wheeler market and allow it to take on companies like Hero MotoCorp Ltd and Honda Motor Co in India.

According to Mahindra, the transaction would be ''subject to [European] Works Council consultation, as part of the employee dialogue process and antitrust law.''