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Mahindra & Mahindra brought 51% stake in Peugeot Citroen scooter unit
ƒ Mahindra Two Wheelers, a part of Mahindra Group, has entered into a binding bid to acquire 51%
stake for Rs 2.16 bn or Euro 28 mn, in Peugeot Motorcycles. The move is seen as an attempt by the
Indian company to expand its two‐wheeler business.
ƒ Out of the Euro 28 mn, Euor 13 mn will be spent on secondary sale of shares from Peugeot of PSA,
and Euro 15 mn through a fresh issue of shares to M&M. The legal process will be completed in
three months. Once the formalities are completed, the new board will have 3 nominees from
Mahindra Two Wheelers and 2 from PSA Group.
ƒ The four areas M&M‐Peugeot will work on are building the brand, expedite global expansion,
investing in product portfolio and bring together synergies in sourcing and selling.
ƒ Both companies will operate as two independent entities. Peugeot is the 5th largest two wheeler
maker in Europe with a market share of 9% and annual volumes of 79,000 units.
ƒ PSA has 300 employees through its JV in China and 500 in France. As part of the agreement, M&M
will not be doing any restructuring or rationalising workforce in the next two years. Peugeot is
heavily focused on Europe, with 75% of its sales coming from Europe. The region, however, merely
contributes for 4% of the global two wheeler market.
Our take
M&M investment in its 2W business is Rs. 11.13 bn as on 31st march 2014, with an aim to expand its
domestic as well as global footprint. We believe this deal is a good deal for Mahindra Two Wheelers to gain
technology and simultaneously expand its global footprint. Peugeot is a strong brand, which will help to
gain market share in India’s fast growing Scooter market. The entry into India, which accounts for almost
21% of the world two wheeler markets, is one of the key opportunities for Mahindra‐Peugeot to gain
market share in premium segment for scooters in the country. However financial impact can be seen in
medium to long run. At CMP of Rs 1359, M&M is trading at 12.7x FY16e consolidated earnings, which is
slightly higher than its historical average of 12x. We maintain HOLD rating on the stock with target price of
Rs. 1212 (12x FY16E earnings).
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
��
LINK
http://www.indianivesh.in/Admin/Upload/635483571946478750_NiveshDaily%20October%208,%202014.pdf
Mahindra & Mahindra brought 51% stake in Peugeot Citroen scooter unit
ƒ Mahindra Two Wheelers, a part of Mahindra Group, has entered into a binding bid to acquire 51%
stake for Rs 2.16 bn or Euro 28 mn, in Peugeot Motorcycles. The move is seen as an attempt by the
Indian company to expand its two‐wheeler business.
ƒ Out of the Euro 28 mn, Euor 13 mn will be spent on secondary sale of shares from Peugeot of PSA,
and Euro 15 mn through a fresh issue of shares to M&M. The legal process will be completed in
three months. Once the formalities are completed, the new board will have 3 nominees from
Mahindra Two Wheelers and 2 from PSA Group.
ƒ The four areas M&M‐Peugeot will work on are building the brand, expedite global expansion,
investing in product portfolio and bring together synergies in sourcing and selling.
ƒ Both companies will operate as two independent entities. Peugeot is the 5th largest two wheeler
maker in Europe with a market share of 9% and annual volumes of 79,000 units.
ƒ PSA has 300 employees through its JV in China and 500 in France. As part of the agreement, M&M
will not be doing any restructuring or rationalising workforce in the next two years. Peugeot is
heavily focused on Europe, with 75% of its sales coming from Europe. The region, however, merely
contributes for 4% of the global two wheeler market.
Our take
M&M investment in its 2W business is Rs. 11.13 bn as on 31st march 2014, with an aim to expand its
domestic as well as global footprint. We believe this deal is a good deal for Mahindra Two Wheelers to gain
technology and simultaneously expand its global footprint. Peugeot is a strong brand, which will help to
gain market share in India’s fast growing Scooter market. The entry into India, which accounts for almost
21% of the world two wheeler markets, is one of the key opportunities for Mahindra‐Peugeot to gain
market share in premium segment for scooters in the country. However financial impact can be seen in
medium to long run. At CMP of Rs 1359, M&M is trading at 12.7x FY16e consolidated earnings, which is
slightly higher than its historical average of 12x. We maintain HOLD rating on the stock with target price of
Rs. 1212 (12x FY16E earnings).
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
��
LINK
http://www.indianivesh.in/Admin/Upload/635483571946478750_NiveshDaily%20October%208,%202014.pdf
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