Mahindra to buy a majority stake in Isuzu for ₹555 crore to grab a bigger slice of the truck and buses pie

Mahindra & Mahindra Limited said on Saturday that it has entered into an agreement to buy a majority stake of 58.96% in SML Isuzu for an aggregate price of ₹555 crore, in a concerted effort to strengthen its presence in the heavy commercial vehicles segment, that includes trucks and buses.

According to the terms of the agreement, Mahindra will make an open offer of ₹650 per share in accordance with the Sebi takeover regulations to buy the entire 43.96% stake in SML Isuzu held by Sumitomo Corporation—a promoter of SML—in tandem with acquiring the 15% stake held by Isuzu Motors, the public shareholder of SML. In conjunction with the transaction, Mahindra will also launch a mandatory open offer for acquiring an additional stake of up to 26% stake from eligible public shareholders of SML.

SML Isuzu, incorporated in 1983, currently has a market leading position in the buses segment, with a market share of about 16%. It reported an operating revenue of ₹2,196 crore and an EBITDA of ₹179 crore in FY24. In contrast, Mahindra currently has a 3% market share in the heavy commercial vehicles segment, but has a dominant 52% market share in the light commercial vehicles segment. With this proposed acquisition, Mahindra plans to double its market share in the segment to 6%—with plans to increase it to 10 - 12% by FY31 and more than 20% by FY36.

“The acquisition of SML Isuzu marks a significant milestone in Mahindra Group's vision of delivering a five-fold growth in our emerging businesses. This acquisition is aligned with our capital allocation strategy for investing in high potential growth areas which have a strong right to win and have demonstrated operational excellence,” said Dr. Anish Shah, MD and CEO, Mahindra Group, in a statement.

“SML brings a strong legacy, a loyal customer base, and a credible product portfolio that complements Mahindra’s existing offerings in the trucks and buses segment. This acquisition is a pivotal step toward our ambition to become a full-range, formidable player in commercial vehicles by enhancing market coverage, unlocking operating leverage through platform consolidation, a unified supplier and network base, and better plant utilisation,” added Rajesh Jejurikar, Executive Director and CEO, Auto and Farm Sector, Mahindra & Mahindra.

The transaction, including the open offer, is subject to the approval of the Competition Commission of India and is expected to complete within 2025 in accordance with SEBI’s Takeover Regulations.