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

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

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'Our combined strengths are a potent recipe for success'

The 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 the aggregate, for acquiring 51% stake and for the future operations of the company, an amount not exceeding Rs 1,400 crore -- which includes the likely investment of about Rs 657 crores for 51 per cent in the JV. The new venture will acquire the automotive business of Ford India Pvt Ltd (FIPL), a wholly-owned subsidiary of FMC, and has been engaged in the automotive business in India since 1995. The automotive business to be acquired includes vehicle manufacturing plants of Ford India at Chennai and Sanand.

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The acquisition will, however, exclude the separate powertrain facility in Sanand, which is essentially used for FMC's global markets, and the powertrain division of FIPL would not form part of the 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 technology 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 the year ended March 31, 2019. It was at Rs 25,010 crore in FY18 and Rs 22,103 crore in FY17. The joint venture expects to introduce three new utility vehicles under the 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

Another area of focus for the joint venture will be electric vehicles. Ford and Mahindra will collaborate to develop vehicles to support the growth of sustainable mobility across emerging markets. The completion of the 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 the 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, the two partners had signed a definitive agreement to co-develop a mid-sized SUV for India and other emerging markets.

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