M&M acquires Punjab Tractor''s stake; state government threatens probe

Our Corporate Bureau
09 March 2007

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.