MUMBAI (TIP): Mahindra & Mahindra and Tech Mahindra agreed to buy Italian car designer Pininfarina SpA in a deal worth about euro 168 million ($185 million), underscoring the Indian vehicle maker’s international ambitions.
M&M, together with its affiliate Tech Mahindra, would form a special purpose vehicle (SPV) to acquire 76 per cent stake in the indebted Italian firm. While Tech Mahindra will own 60 per cent in the SPV, M&M will own the remaining share. Both companies would pay euro 25.3 million (Rs 186 crore) to buy Pininfarina’s promoter Pincar’s stake. Further, the SPV would make an open offer of euro 20 million (Rs 147 crore) to the public shareholders of Pininfarina to acquire the remaining stake in the Italian firm.
“The legendary high-end design credentials of Pininfarina will significantly enhance the design capabilities of the entire Mahindra group,” Chairman Anand Mahindra said in the statement. “Given the increasing design sensibilities of today’s consumers, product design will greatly influence customer choice.”
The takeover of Pininfarina, the creator of numerous Ferraris including the 458 Spider roadster, marks the latest international expansion by Mahindra following its acquisitions of South Korean carmaker Ssangyong and the motorcycle unit of French auto manufacturer PSA Peugeot Citroen. The designer already cooperates with Mumbai-based Mahindra on sports utility vehicle (SUV) development and worked with it on the Halo electric sports-car concept unveiled last year.
Pininfarina, which has been unprofitable for 10 of the past 11 years while struggling with debt, shut a floundering division that built cars for other manufacturers three years ago. The deal is expected to close in the first half of 2016. Mahindra was advised by Rothschild & Co, while EY advised Pininfarina.
The buy-out of the 85-year-old firm will help Tech Mahindra, India’s fifth largest information technology firm, strengthen its engineering services business.
Tech Mahindra will also benefit from the designer’s focused presence in Italy and Germany, hotbeds of European automotive manufacturing, as well as in the US and an emerging automotive market, China. It also augments Tech Mahindra’s transportation, aerospace and industrial design offerings. For Pininfarina, the acquisition will mean an ability to leverage Tech Mahindra’s presence across 90 countries and access to about 780 customers.
In September this year, Tech mahindra had joined hands with Ericsson, EBS and TomTom, and came up with a connected car solutions for the automobile makers. The solution features built-in analytics capabilities to manage recorded information from a vehicle and its sensors. It also enables service providers and manufacturers to deliver a range of services such as remote diagnostics, roadside assistance and emergency calls. It also delivers infotainment, news and location-based information inside a car.
Following the deal, Pininfarina will remain an independent company with a separate listing in Milan. Paolo Pininfarina, a grandson of the company’s founder, will remain chairman.
Pinfarina is “a jewel,” Tech Mahindra’s chief executive Chander Prakash Gurnani said at a press conference in Turin. “It will continue to be polished. It will continue to be built better now we have the financial muscles to build it.”