Billion dollar Mahindra Group finally managed to buy a controlling stake in the world famous car design firm Pininfarina. Based in Italy, Pininfarina was founded by Battista “Pinin” Farina in 1930. The company is currently headed by Paolo Pininfarina (in the image above, on the left).
Pininfarina is the styling company which is behind brands like Ferrari Peugeot, Alfa Romeo, Peugeot and many more. In all these years, they have designed over 1,000 cars for various brands, including Tata Motors (image below) and Mahindra (remember Halo sportscar on display at 2014 Delhi Auto Expo?).
Pininfarina has been a loss making firm for many years now. As of Sep 2015, the company had net debt of 47.4 million euros ($52.3 million or INR 351 crore). As per the agreement, Tech Mahindra will buy a stake of 76.06 % in Pininfarina from the current majority share holder – Pincar S.r.l. at a price of Euro 1.1 per share. This means, Mahindra will have to shell out roughly 33 million euros ($36 million or INR 241.5 crore).
Apart from this, Mahindra will also make a offer to the remaining public share holders to buy the remaining 33 million euros ($36 million). Mahindra has also agreed to provide a guarantee of 114.5 million euros ($126.34 million or INR 847.5 crore) to the lenders, creditors and lessors of Pininfarina. Mahindra has promised to infuse 20 million euros ($22 million or INR 148 crore) into Pininfarina through a rights issue.
This means, the total investment Mahindra will be making in Pininfarina could amount to INR 317.5 crore (if they get to buy 100% stake) + INR 847.5 crore (guarantee) + INR 351 crore (debt) = INR 1,516 crore ($226.2 million or EUR 202.2 million). The stake in Pininfarina will be owned by a JV company which will be co-owned by Tech Mahindra and Mahindra in the ratio of 60% and 40% respectively.
Mr. Anand Mahindra, Chairman of the Mahindra Group, commenting on Pininfarina joining the Mahindra family, said, “Pininfarina will add enormous value to Tech Mahindra’s portfolio of engineering services. But just as important is the fact that the legendary high-end design credentials of Pininfarina will significantly enhance the design capabilities of the entire Mahindra Group. Given the increasing design sensibilities of today’s consumers, product design will greatly influence customer choice and experience, and hence our success”.
Paolo Pininfarina, Chairman Pininfarina S.p.A. added, “In a globalized world, entrepreneurship and capital do not need a passport. We are joining hands with a $ 3.9 Billion Technology & Global partner, and part of the $ 16.9 billion global Mahindra Group, which will not only strengthen our Italian identity but will open more doors. Tech Mahindra’s global presence and global delivery model will allow us to compete for a larger pie of the business.”
Full terms of the agreement in the news release below.