Tech Mahindra Limited, a listed subsidiary of Mahindra group has entered a deal with Pincar S.r.l to purchase a controlling stake in Pininfarina S.p.a, the top Italian design company that styles Ferrari, Maserati, Rolls-Royce and Cadillac cars. The deal is said to be worth $185 million and agreement is to acquire 76.06% stake in Pininfarina from its current controlling shareholder Pincar S.r.l.
Founded 85 years ago by Battista ‘Pinin’ Farina, the legendary Pininfarina has worked for almost 1000 cars across various brands over years. Quite recently, it started to design of planes, boats and wind tunnels for car tests. But in the past decade, the company has not been generating any profits and had net debt of $57 million at the end of June this year. The loss is partly because car makers have brought design in-house rather than hire independent design firms.
The acquisition is three-step deal that includes an open letter to the Italian company’s minority shareholders and a rights issue later in the year to infuse funds in it. As per the agreement, Tech Mahindra and Mahindra shall purchase 76.06% of Pininfarina shares at a price of 1.1 Euros per share. The investment would be a joint venture of Tech Mahindra that will hold 40% of the controlling stake and Mahindra and Mahindra will hold the remaining 60%. The remaining ordinary shares of the copany will be sold at the same purchase price held by Pincar S.r.l.
Further to the acquisition, Tech Mahindra says Pininfarina will continue to function as an independent company. Also, Pininfarina would remain listed on the Milan Stock Exchange and Paolo Pininfarina will continue to be the company’s chairman. Mahindra Group Chairman Anand Mahindra said, “”Pininfarina will add enormous value to Tech Mahindra’s portfolio of engineering services. The legendary high-end design credentials of Pininfarina will significantly enhance the design capabilities of the entire Mahindra Group,” at the press release.
The acquisition is expected to give Tech Mahindra “a critical foothold in key, early-stage conversations in the automotive and other verticals.” Also, it would give Mahindra an entry to automotive styling while offering contributions to its transportation, aerospace and industrial design work.
Mahindra also added, “For Pininfarina, the acquisition will mean an ability to leverage Tech Mahindra’s presence across 90 countries and access to about 780 customers. Tech Mahindra’s global delivery model will lend Pininfarina a newly heightened scale to its operations.”
This acquisition has been the recent of the Mahindra Group’s global acquisitions in the automotive space. It has in the past acquired South Korean automaker Ssangyong and the motorcycle unit of France-based PSA Peugeot Citroen. It also has an aerospace unit in Australia.