Mahindra To Acquire Navistar's Stake in Mahindra Navistar Automotives and Mahindra Navistar Engines
Mahindra & Mahindra Ltd. (M&M) and Navistar International Corporation (NYSE: NAV) announced today that Mahindra intends to purchase Navistar Group's stake in Mahindra Navistar Automotives Ltd (MNAL) and Mahindra Navistar Engines Pvt Ltd (MNEPL). Following the purchase, both MNAL and MNEPL would become wholly owned subsidiaries of Mahindra. Mahindra would take complete ownership of operations and continue to sell MNEPL and MNAL products. The sale requires regulatory approval in India, is subject to the conclusion of definitive agreements, and is expected to be completed in early 2013.
The terms of the proposed transaction call for Mahindra to pay approximately Rs.175 crores, or $33 million, for Navistar Group's stake in both ventures. The agreement allows Navistar to continue sourcing components from India while Mahindra would continue to provide engineering services to Navistar. Navistar group would continue to support M&M through a license agreement and extend necessary support to MNAL and MNEPL for the purposes of business continuity.
As part of its "Drive to Deliver" turnaround plan launched in August, Navistar has been conducting an analysis of all of its businesses and programs to determine their return on invested capital (ROIC) and identify