Mahindra Two Wheelers Limited acquired a 51 per cent stake in the French two-wheeler company Peugeot Motorcycles. The transaction was completed on Jan 21, three months from the date it was announced. Industry experts believe that the strategic motive of the acquisition will be well rewarded for both the companies in the long run. Mahindra has to pump 15 million Euros into Peugeot Motorcycles according to the terms of the deal, which would help in financing some projects that will be rolled out as the byproduct of a strategic alliance. It is rumored that Mahindra plans to offer Peugeot Motor vehicles in India with the help of this deal.
The Works Council consultation is pending for the transaction done between Mahindra Two Wheelers and PSA as a part of the antitrust law and employee dialogue process. In addition to the 15 million euros, Mahindra Two Wheelers will take up shares in the Peugeot’s scooter arm worth 13 million euros. This makes the acquisition done at a total of 28 million euros. This partnership is seen as a tool to gain market share in the scooter segment by both the companies and also be complimentary to each other when it comes to international expansion.
PSA is a subsidiary of the French automaker Peugeot. Peugeot motorcycles and scooters are primarily targeted to the French domestic market. It is very evident that they now are focusing on international growth and gaining higher market share. Peugeot hopes that this partnership would be a measure to tackle their declining popularity in Europe – including UK. The firm does not intend to blur the products with those of Mahindra, but focus on a higher end of the market by offering Peugeot motorcycles. However, Mahindra will have the liberty of using Peugeot’s NG technology and incorporating the same in its two-wheelers. Mahindra is also focusing on improving the declining sales of Peugeot’s motorcycles in the European countries, and also help it in expanding its growth into Asian and Indian markets.
This partnership would enable both Mahindra and Peugeot to accelerate their international expansion by leveraging their respective strengths. The acquisition was not questioned by the law in any aspect, be it regulatory, financial or legal, as it was completed very smoothly in a very short period. With this acquisition, we can see Peugeot rolling out motor scooters for the high-end market to compete against the existing models like Vespa, sold by the Piaggio group.
