Mahindra in talks to buy Italy's Pininfarina - sources

By Stefano Rebaudo and Pamela Barbaglia

MILAN/LONDON (Reuters) - Mahindra & Mahindra is in talks to buy a majority stake in luxury car designer Pininfarina in what would be the latest Asian bid for an iconic Italian brand, three sources with knowledge of the matter said on Wednesday.

Shares in Milan-listed Pininfarina, which has designed cars for Ferrari, Maserati, Rolls-Royce and Cadillac, jumped 21 percent to 4.96 euros, their highest in nearly a year on hopes of a takeover by India's largest maker of sport utility vehicles.

A spokesman for Pininfarina said the company did not comment on market rumours. Mahindra declined to comment.

One of the sources said the talks were at an advanced stage, but the other two said the companies were far from an agreement.

"It will be a nice acquisition for (Mahindra), but it's not a must have, so they will be very cautious on valuations," one of the sources said.

Turin-based Pininfarina's market capitalisation as of Tuesday night was $135 million.

The company has been loss-making for years and has a bank debt that is almost equal to its market value. It has been struggling to stay in business as car companies have moved to hire more in-house stylists at the expense of independent design firms.

The group, which today also designs buildings, interiors, furniture and electronics, among others, reported a 2014 net loss of 1.3 million euros. Its net debt stood at 45 million euros at the end of 2014 and is expected to rise this year.

If the talks succeed, Pininfarina could become the latest Italian industrial brand to be snapped up by an Asian buyer after China National Chemical Corp on Sunday agreed to buy into tyre-maker Pirelli in a 7.3 billion euro deal.

Mahindra's link to Pininfarina goes back to 2013 when the Indian company hired Hubert Tassin, a former designer who worked at Pininfarina for more than six years, according to his LinkedIn profile.

Tassin is the lead designer at Mahindra Reva, the company's electric car business. Among his top projects is Halo, a sporty-looking electric car that was on display at the auto show in New Delhi in 2014.

Mahindra has earned a reputation for buying distressed, undervalued companies, analysts said. In 2010, it bought troubled South Korean automaker Ssangyong Motor and last year it acquired a majority stake in France-based Peugeot's loss-making scooter business.

(Additional reporting by Sumeet and Aditi Shah in Bombay, writing by Agnieszka Flak; Editing by Elaine Hardcastle)