Mahindra & Mahindra is set to pick up 13.5% stake in Spain's auto component maker CIE Automotive for euro 96.24 Mn (R740 Cr), BSE states. M&M will merge all its auto components businesses into Mahindra Forgings. Mahindra Forgings will be renamed Mahindra CIE Automotive, where the Spanish auto components maker will hold 51.1% and Mahindra 20.2%.
The remaining stake will be with shareholders, institutional and public.
Mahindra will use the proceeds from the stake sale in its subsidiaries to buy 13.5% stake in CIE, at 6 euro a share.
M&M will sell stakes in its three group firms, Mahindra Forgings, Mahindra Hinoday Industries, Mahindra Composites to Participaciones Internacionales Autometal Dos, SL, CIE Automotive SA and Autometal, SA.
This alliance will give M&M access to Latin American markets while offering the European partner footprint in the Indian market.
The share sale by Mahindra will trigger open-offer in Mahindra Forgings and Mahindra Composites.
Mahindra CIE Automotive, in which CIE’s forging business in Spain and Lithuania will also be merged, will have a board of 14 directors — three from M&M, four from CIE and seven independent. M&M hopes the multi-structured deal, after regulatory approvals, will be completed in 12-14 months.
CIE Automotive is one of the main suppliers of components and sub-components for the automobile sector operating in Europe, Brazil, NAFTA and China with sales of $2.2 Bn. CIE develops its entire line of products through seven basic processes or technologies (forging, machining, aluminum, stamping, plastic, iron casting and painting). With them, CIE manufactures components and sub-assemblies for all parts of vehicles.
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