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Shares of commercial vehicle maker SML Isuzu Ltd. hit the 10% lower circuit on April 28 after Mahindra & Mahindra Ltd. (M&M) announced a significant acquisition plan. The auto major revealed it will acquire a 58.96% stake in the company for Rs 555 crore, triggering sharp investor reaction and a mandatory open offer under SEBI norms.
The deal values SML Isuzu at Rs 650 per share, and includes M&M acquiring the entire 43.96% stake of Sumitomo Corporation (current promoter) and a 15% stake held by Isuzu Motors Ltd, a public shareholder. Following this, M&M will also initiate an open offer to buy an additional 26% from public shareholders, as per regulatory requirements.
By 10:10 AM, SML Isuzu shares dropped to Rs 1,596.1, reflecting a full 10% decline, while Mahindra & Mahindra’s stock rose 1.3% to Rs 2,900.
M&M stated the acquisition is strategic to strengthen its presence in the >3.5-tonne commercial vehicle (CV) segment, where it currently holds only a 3% market share, compared to 52% in the <3.5-tonne light commercial vehicle segment. With this move, the company aims to double its market share in trucks and buses to 6% immediately, with plans to grow it to 12% by FY2031.
The news also comes shortly after Ashok Leyland denied any involvement in potential talks to acquire SML Isuzu, calling previous reports on the matter "factually incorrect.
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