SML Isuzu share price hits 10% lower circuit as M&M to acquire 58.96% stake in company

Stock Market Today: Shares of SML Isuzu faced intense selling pressure in the morning trade on Monday, April 28, after Mahindra & Mahindra (M&M) announced signing an agreement to acquire a 58.96% stake in the company for ₹555 crore.

While M&M will be acquiring 43.96% stakes from Sumitomo Corp’s promoter and 15% stake from its public shareholder, Isuzu Motors, it will also launch an open offer in accordance with the SEBI Takeover Regulations.

The price fixed for the open offer of SML Isuzu by M&M is at ₹1,554 per share, a 13% discount to Friday's closing price.

M&M-SML Isuzu agreement

M&M over the weekend announced that it has entered into an agreement to acquire a 58.96% stake in SML Isuzu at ₹650 per share, which is an outlay of ₹555 crore.

For a total consideration of ₹555 crore, the Mumbai-based automaker will be acquiring the full 43.96% stake held by SML's promoter, Sumitomo Corporation, as well as a separate 15% stake held by SML's public shareholder, Isuzu Motors Ltd. In addition and in line with the SEBI Takeover Regulations, M&M would also issue an obligatory open offer to acquire up to 26% of SML from eligible public shareholders.

M&M plans to strengthen its CV segment

With a current market share of 3% in the >3.5T CV category and 52% in the <3.5T LCV segment, as per the company, the proposed acquisition is a step towards building a strong presence in that market.

Over the past few years, M&M's Trucks and Buses Division has achieved significant progress. The market share will double to 6% as a result of this acquisition as per the company, with plans to raise it to 10% to 12% by FY31 and 20%+ by FY36, the company said.

SML Isuzu share price movement

SML Isuzu share price opened at ₹1701.95, nearly 4% below its previous closing price of ₹1766.70. Soon, the small-cap stock faced more intense selling pressure, tumbling as much as 10% to hit the lower circuit limit of ₹1,590.05 apiece.

Meanwhile, M&M share price gained following the announcement. The BSE Sensex stock rose nearly 2% today and was trading at ₹2898.70, up 1.3% around 10.25 am.

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