Mahindra has yesterday announced it is acquiring a 33 per cent stake in Mitsubishi Agricultural Machinery which will aid in the latter’s international expansion.
Under the definitive agreement, Mahindra will invest JPY 3 billion (USD 25 million) to acquire the 33 per cent voting stake in Mitsubishi Agricultural Machinery Co. Ltd (MAM), a subsidiary of Mitsubishi Heavy Industries Ltd (MHI), through fresh issue of common shares and Class A (non-voting) shares.
The deal is expected to close by October 1 this year with the new funding to be used to increase MAM’s capital base.
The agreement was signed by MHI Machinery, Equipment & Infrastructure President and CEO Kazuaki Kimura; MAM President Katsumi Tottori and Mahindra & Mahindra Ltd President and Chief Executive (Farm Equipment & Two Wheeler) Rajesh Jejurikar.
Kimura says the agreement signals a new level of partnership between the two companies which have been in place for over a decade.
“I am sure that the commitment and expertise of both companies will open a new horizon to the business globally,” he says.
According to Jejurikar, the new partnership is a “win-win” situation for the companies’ agricultural businesses.
“This will enable strategic growth avenues for MAM through Mahindra USA, China and other international markets, thereby speeding up international expansion,” he says.
“It will also provide a platform for both companies to leverage technology and product development synergies.”
Prior to the new agreement, MAM has been supplying OEM tractors to Mahindra USA as well as providing technical licenses to Mahindra for walk-behind rice planters and new tractors in India.
Mahindra says the new partnership will not only help both companies co-develop products to address global machinery needs; but also enable MAM and Mahindra to improve cost competitiveness through joint procurement and supply chain optimisation.
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