(Adds details, background)
MILAN, March 26 (Reuters) - Indian vehicle maker Mahindra & Mahindra MAHM.NS has expressed an interest in buying car designer Pininfarina PNNI.MI but no deal has been reached yet, the Italian company confirmed on Thursday.
Sources with knowledge of the matter told Reuters on Wednesday Mahindra & Mahindra was in talks to buy a majority stake in Pininfarina, famous for its design of Ferraris and many other luxury cars. ID:nL6N0WR43A
A takeover of the now heavily indebted firm would be the latest sale of an iconic Italian brand to an Asian investor, following on from China National Chemical Corp's 7.3 billion-euro deal announced this week to buy into tyre-maker Pirelli.
Reports of the talks sent shares in Milan-listed Pininfarina up 26 percent on Wednesday to 5.15 euros, valuing the company at 140 million euros ($155 million).
The shares were trading down 7 percent on Thursday at 4.77 euros.
Pininfarina said in its statement that any deal would need the backing of its controlling shareholder Pincar - which has a 76 percent stake in the group - and of its 13 creditor banks.
It said Pincar's stake has been put up as collateral for the banks' financing, and a 2008 debt restructuring agreement with creditors envisages the possible sale of the company.
Mahindra, which is already one of Pininfarina's most important customers, said in a separate statement that reports about the talks were speculative and that the company had not entered into any arrangements.
Sources with knowledge of the matter had said on Wednesday that the two companies were far from signing an agreement. Pininfarina was not a "must have" for Mahindra, one of the sources said.
The company has been loss-making for years and has a bank debt that is almost equal to its market value. It has been struggling as car companies have moved to hire more in-house stylists at the expense of independent design firms.
The group, which has expanded its design work to buildings, interiors, furniture and electronics reported a 2014 net loss of 1.3 million euros. Its net debt stood at 45 million euros at the end of 2014 and is expected to rise this year.
Mahindra has earned a reputation for buying distressed, undervalued companies. In 2010, it bought troubled South Korean automaker Ssangyong Motor and last year it acquired a majority stake in France-based Peugeot's loss-making scooter business. ($1 = 0.9063 euros)
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.