M&M to buy 33% stake in Mitsubishi Agricultural Machinery for $25 mn

Farm equipment and utility vehicle major Mahindra & Mahindra (M&M) is acquiring a 33-per cent stake in Mitsubishi Agricultural Machinery Co (MAM) for $25 million (Rs158 crore).

"Under the definitive agreement signed today, Mahindra will invest $25 million for acquiring 33 per cent voting stake in MHI subsidiary, Mitsubishi Agricultural Machinery Company (MAM) Ltd, through fresh issue of common shares and Class A shares of (MAM)," Mahindra said in a BSE filing.

MAM, a subsidiary of Tokyo-based Mitsubishi Heavy Industries (MHI), is a manufacturer of tractors, combine harvesters, rice transplanters and other machinery. The company had posted revenues of $408 million in 2014-15, M&M said in a regulatory filing.

''This will enable strategic growth avenues for Mitsubishi Agricultural Machinery through Mahindra USA, China and other international markets, thereby speeding up international expansion. It will also provide a platform for both the companies to leverage technology and product development synergies,'' said Rajesh Jejurikar, president and chief executive officer (Farm Equipment & Two-Wheeler Division) at Mahindra & Mahindra.

The companies expect to close the deal by 1 October.

This partnership will help the companies to jointly develop products to address global opportunities in the tractor and agri-machinery space, apart from improving cost competitiveness through joint procurement and optimising supply chain.