Tech Mahindra declines after purchasing controlling stake in Pininfarina

Tech Mahindra declined 0.5% to Rs 540 at 9:25 IST on BSE after the company and Mahindra & Mahindra jointly entered into an agreement with Pincar S.r.l., to purchase a controlling stake in Pininfarina S.p.A.

Mahindra & Mahindra (M&M) shed 0.14% to Rs 1,285.20.

Tech Mahindra and M&M separately made the announcements after market hours yesterday, 14 December 2015.

Meanwhile, the BSE Sensex was up 20.72 points, or 0.08%, to 25,171.07.

On BSE, so far 14,992 shares were traded in Tech Mahindra's counter, compared with an average volume of 1.33 lakh shares in the past one quarter.

The stock hit high of Rs 550.50 and low of Rs 539 so far during the day.

Tech Mahindra and Mahindra & Mahindra (M&M) have jointly entered into an agreement with Pincar S.r.l., to purchase a controlling stake in Pininfarina S.p.A., an iconic Italian brand in automotive and industrial design. The announcement was made after market hours yesterday, 14 December 2015. Pininfarina is an automotive design and engineering services company providing services to global automotive OEMs. Pininfarina clocked revenue of about euro 86.60 million in year ended 31 December 2014. The acquisition will broaden Tech Mahindra's engineering service offering to its customers.

As part of the agreement, Tech Mahindra and M&M shall purchase 76.06% of Pininfarina shares from the current controlling shareholder Pincar S.r.l. at a price of euro 1.1 per share. This investment by Tech Mahindra and M&M shall be done via a special purpose vehicle (SPV) whose ownership shall be held 60% by Tech Mahindra and 40% by M&M. This will be followed by an open offer for all the remaining ordinary shares of Pininfarina at the same purchase price paid for the shares held by Pincar. The SPV will infuse funds to the tune of euro 20 million into Pininfarina by way of a rights issue before the end of 2016. Tech Mahindra and M&M have also signed definitive agreement with the lenders, creditors and lessors of Pininfarina to restructure the existing debt of Pininfarina. Tech Mahindra and M&M have also decided to provide on a joint and several basis corporate guarantee not exceeding euro 114.50 million to the lenders, creditors and lessors of Pininfarina.

Pininfarina will continue to remain an independent company, listed on the Milan Stock Exchange, with Paolo Pininfarina continuing as the Chairman of its board.

Tech Mahindra's consolidated net profit rose 16.2% to Rs 785.60 crore on 5.1% rise in revenue to Rs 6615.50 crore in Q2 September 2015 over Q1 June 2015.

Tech Mahindra is a specialist in digital transformation, consulting and business re-engineering solutions.

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