Mahindra to acquire 33 percent stake in Mitsubishi Agricultural Machinery

India-based conglomerate Mahindra and Mahindra (M&M) on Thursday said it will acquire 33 percent voting stake in Mitsubishi Heavy Industries's subsidiary -- Mitsubishi Agricultural Machinery (MAM).

Under an agreement, Mahindra will invest three billion yen or $25 million for the acquisition.

According to the company, the transaction will come through fresh issuance of common shares and class A (non-voting) shares of MAM.

The deal is expected to close by October 1, 2015, with the new funding to be used to increase MAM's capital base.

The company said this alliance will help it become a significant player in the global agriculture machinery industry.

"We have had a decade-long association with Mitsubishi in the US where their products have played a significant role in Mahindra USA's success," Pawan Goenka, executive director with Mahindra was quoted in a statement.

MAM has been supplying OEM (orginal equipment manufacturer) tractors to Mahindra USA, as well as providing technical licence to Mahindra for walk-behind rice planters and new tractor in India.

The company added that the new partnership will allow both sides to jointly develop products to address global opportunities in the tractor and agri-machinery space.

"In addition, the partnership will enable MAM and Mahindra to improve cost competitiveness though joint procurement and optimize the supply chain," the statement said.

Currently, Mahindra is the world's largest tractor manufacturer by volume with a very strong leadership presence in India.

MAM, on the other hand, provides a full range of agri-machinery, including tractors, combine harvesters and rice transplanters, among others.