Mahindra & Mahindra fell 1.06% to Rs 621 at 9:14 IST on BSE in weak market after the utility vehicles major won the bid to acquire South Korea’s Ssangyong Motor after offering the highest bid price and securing financing plans.
Meanwhile, the BSE Sensex was down 122.60 points, or 0.68%, to 17,947.59.
On BSE, 16,000 shares were traded in the counter as against an average daily volume of 3.04 lakh shares in the past one quarter.
The stock hit a high of Rs 626 and a low of Rs 619 so far during the day. The stock had hit a record high of Rs 677 on 3 August 2010 and a 52-week low of Rs 367.60 on 19 August 2009.
The stock had underperformed the market over the past one month till 11 August 2010, falling 1.69% compared with the Sensex’s 1.33% rise. It outperformed the market in past one quarter, gaining 11.67% as against 5.42% rise in the Sensex.
India’s largest tractors and utility vehicles maker by sales has an equity capital of Rs 289.26 crore. Face value per share is Rs 5.
Ssangyong Motor selected Mahindra & Mahindra (M&M) as the preferred bidder after studying various bid prices, funding capabilities and willingness to develop the company. Ssangyong will sign a memorandum of understanding with the Indian company by the end of this month before due diligence begins in September 2010.
A total of six bidders, including an alliance of French automaker Renault SA and Japan’s Nissan Motor Co., had submitted preliminary bids for acquiring ailing South Korean automaker. But only three, including Indian tiremaker Ruia Group and Young An Hat Co., remained in the race until the deadline for bidding ended Tuesday, 10 August 2010.
Ssangyong declined to reveal M&M’s offer price and said the final acquisition price would be decided in October 2010 after due diligence. It plans to close the deal in November 2010 and has selected Ruia as a reserve bidder.
Ssangyong was granted court protection from creditors in February 2009 after rising oil prices and slowing demand due to the global recession hit its flagship sport-utility vehicles (SUV).
M&M is eyeing Ssangyong to gain access to new technologies for production of SUVs and expand its overseas presence, especially in Asia and Russia.
Mahindra & Mahindra’s net profit surged 40.3% to Rs 562.39 crore on 21.2% increase in net sales to Rs 5124.17 crore in Q1 June 2010 over Q1 June 2009.