Tech Mahindra, M&M to buy Pininfarina

Milan-listed Pininfarina designed cars for Ferrari, Maserati, Cadillac and Rolls-Royce

Tech Mahindra and Mahindra and Mahindra Ltd, part of the Mahindra Group, have agreed to buy Italian car designer Pininfarina S.p.A. in an all-cash deal.

60:40 joint venture

Tech Mahindra and Mahindra and Mahindra have formed an 60:40 joint venture for the acquisition of Milan-listed Pininfarina, which has designed cars for Ferrari, Maserati, Rolls-Royce and Cadillac.

The joint venture would acquire 76.06 per cent in Pininfarina from its controlling shareholder Pincar S.r.l at a price of euro 1.1 per share or 25.3 million euros, the companies said in a statement.

At the same price of euro 1.1 per share, the joint venture would buy out the remaining 23.94 per cent ordinary shares of Pininfarina, through an open offer.

The JV, will also infuse 20 million euros into Pininfarina by way of a rights issue, which would be executed before the end of 2016.

Pininfarina has been unprofitable for 10 of the past 11 years while struggling with debt. The firm had a consolidated revenue of 86.6 million euros in 2014.

Tech Mahindra and Mahindra and Mahindra have also signed definitive agreements with the lenders, creditors and lessors of Pininfarina to restructure the existing debt.

Tech Mahindra and M&M on a joint and several basis, provide a corporate guarantee not exceeding 114.5 million euros to the lenders, creditors and lessors of Pininfarina.

“Pininfarina will add enormous value to Tech Mahindra’s portfolio of engineering services. But just as important is the fact that the legendary high-end design credentials of Pininfarina will significantly enhance the design capabilities of the entire Mahindra Group.

Given the increasing design sensibilities of today’s consumers, product, design will greatly influence customer choice and experience and hence our success,” Anand Mahindra, chairman of the Mahindra Group said in statement.

Pininfarina will continue to remain an independent company, listed on the Milan Stock Exchange, with Mr. Paolo Pininfarina continuing as the chairman of the board, the companies said.