Mahindra buys major stake in Ford; to control business in India

Homegrown auto major Mahindra & Mahindra (M&M) on Tuesday anunced acquisition of majority stake in wholly-owned arm of Ford Motor Co (FMC) that will see it take over automotive business of US auto major in India. new entity will develop market and distribute Ford brand vehicles in India. JV will also sell both - Mahindra and Ford - cars in high-growth emerging markets. As part of agreement, M&M will acquire 51% stake in a wholly-owned arm of US auto major -- Ardour Automotive Private Ltd, presently a wholly-owned subsidiary of Ford Motor Company Inc, USA for around Rs 657 crore, Indian firm said in a regulatory filing.

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'Our combined strengths are a potent recipe for success'

balance 49% equity shareholding in Ardour will be held by FMC and/or any of its affiliates, it added. M&M said it is committed to fund in aggregate, for acquiring 51% stake and for future operations of company, an amount t exceeding Rs 1,400 crore -- which includes likely investment of about Rs 657 crores for 51 per cent in JV. new venture will acquire automotive business of Ford India Pvt Ltd (FIPL), a wholly-owned subsidiary of FMC, and has been engd in automotive business in India since 1995.  automotive business to be acquired includes vehicle manufacturing plants of Ford India at Chennai and Sanand.

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acquisition will, however, exclude separate powertrain facility in Sanand, which is essentially used for FMC's global markets, and powertrain division of FIPL would t form part of deal. "Our combined strengths Mahindra's expertise in value-focused engineering and its successful operating model, and Ford's technical expertise, global reach and access to future techlogy are a potent recipe for success," said Anand Mahindra, Chairman, Mahindra Group. Ford India's automotive business had posted revenue of Rs 26,324 crore in year ended March 31, 2019. It was at Rs 25,010 crore in FY18 and Rs 22,103 crore in FY17.  joint venture expects to introduce three new utility vehicles under Ford brand, beginning with a new mid-size sports utility vehicle that will have a common Mahindra product platform and powertrain.

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Ford and Mahindra to collaborate to create sustainable vehicles

Ar area of focus for joint venture will be electric vehicles. Ford and Mahindra will collaborate to develop vehicles to support growth of sustainable mobility across emerging markets.  completion of transaction is expected to take place by mid of 2020. Ford and M&M had in September 2017 inked a pact to explore a strategic alliance covering areas like product development, electric vehicles and distribution in India and emerging markets. Last year two partners have agreed to develop new SUVs, a small electric vehicle and connected car solutions besides supply of Mahindra powertrains to extend Ford's product range as part of several initiatives. Earlier this year, two partners had signed a definitive agreement to co-develop a mid-sized SUV for India and or emerging markets.

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