Benzinga - Shares of automotive giant Mahindra & Mahindra were muted on Tuesday after the automaker responded to a report suggesting that the company was on the brink of signing a memorandum of understanding (MoU) for the acquisition of a 50% stake in Skoda Auto Volkswagen (ETR:VOWG_p) India.
What Happened: Mahindra & Mahindra is eager to acquire a 50% stake in Skoda Auto Volkswagen India, with the deal valued between $800 million and $1 billion (₹6,686 crore-₹8,358 crore), according to Autocar Professional.
The Skoda Auto board of directors are reportedly currently in India for a crucial meeting to outline the agreement, which is expected to be announced soon.
If the deal is successful, Mahindra & Mahindra will reportedly gain the incremental capacity and access to Skoda Auto VW's global technology ecosystem, including vehicle architecture.
At the same time, Skoda Auto VW would gain access to Mahindra & Mahindra’s lower-cost vehicle architecture for future internal combustion engine (ICE (NYSE:ICE)) and electric vehicle (EV) models, as well as significant sourcing benefits due to M&M's industry influence.
The potential acquisition could also impact the development of the next-gen Kushaq and Taigun. Skoda Auto VW could end up using Mahindra's new flexible architecture (NFA) for these models while retaining its own engines. Future electric vehicles could also be based on Mahindra's NFA platform, which is being designed for both ICE and EV powertrains.
The automaker responded to the report in a press release, saying it is in talks with the Volkswagon Group “to explore multiple opportunities to expand the collaboration potential.”
“In case there are any concrete outcomes with regard to any of the aforementioned discussions, appropriate disclosures will be made in a timely manner as per the norms under the listing regulations,” it added.
The development comes on the heels of the firm’s supply agreement with the Volkswagen Group signed in February this year. The companies signed their first supply agreement under which Mahindra will equip a certain range of its electric platform INGLO with electric components of Volkswagen’s modular car platform for EVs, modular electric drive kit and unified cells.
Price Action: Mahindra & Mahindra’s shares were trading flat at ₹3,048 on Tuesday
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