Financial Daily from THE HINDU group of publications
Thursday, Mar 31, 2005
Corporate - Alliances & Joint Ventures
M&M divests stake, exits Ford India
Mumbai , March 30
THE longstanding equity relationship between Mahindra & Mahindra Ltd (M&M) and Ford India Pvt Ltd (FIL), that was commenced to help Ford's entry into the Indian market through the erstwhile Mahindra-Ford joint venture, has formally ended.
Investment compulsions brought about by the Scorpio project had seen M&M water down its holding in Ford India from 50 per cent to 15.88 per cent. Ford had maintained an equity stake of approximately 5 per cent in M&M.
In separate but likely linked moves, M&M has sold its holding in Ford India for an undisclosed amount. A company spokesperson confirmed the shares were sold back to Ford. M&M said in an official statement, "Since the company embarked on concentrating its resources on development and production of Scorpio, it viewed its stake in Ford as a portfolio investment.
"This association did not have any operational or competitive restrictions on either company. Thus, this divestment is a simple change of portfolio."
At recent press briefings in connection with M&M's new 51:49 joint venture with Renault too, senior company officials had called the residual stakes in each others' companies by M&M and Ford as portfolio investment.
Earlier today, Ford Motor Company (FMC) sold 59,76,456 shares of M&M at Rs 478.55 per share. Of this, 55,00,000 shares were bought by Aranda Investments (Mauritius) Pte Ltd, a wholly-owned subsidiary of Temasek Holdings.
Going by information on the BSE, the transaction would be worth Rs 263.20 crore.
"I am pleased that Temasek has decided to invest in M&M and I look forward to a long-term and mutually beneficial association with them," Mr Anand Mahindra, Vice-Chairman and Managing Director, M&M, said in a related statement.
M&M's senior management had maintained at recent press briefings that there was no plan for Renault to take an equity stake in the company as Ford did. However, an official response could not be had on the matter.
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