Ashok Leyland Limited and Mahindra & Mahindra Limited appear to be the frontrunners in the race to acquire a stake of around 43% in Punjab Tractors Limited. The 43% stake has been put on the block by owners, Delhi-based private equity fund Actis and the Burman family, promoter of Dabur. According to unconfirmed reports, Ashok Leyland has placed a higher bid in the range of Rs. 320-380 per share. The Ashok Leyland bid demands some guarantees from the management. Details of M&M’s bid were not known.
If it does eventually manage to acquire the share, Ashok Leyland will have to make a mandatory open offer of another 20% of Punjab Tractors and would eventually become a majority shareholder of the company. An announcement on the stake sale is expected shortly. However, it is still not clear whether Leyland has also managed to acquire the 14% stake Punjab Tractors holds in group company Swaraj Mazda Limited and the 33% stake in Swaraj Engines Limited through the bidding process.
Punjab Tractors has strong brand equity in the tractor market, especially in the northern part of India and the winning bidder could enter the fast-growing tractor segment through this acquisition.
In a related development, of the four front-runners, the Tata Group, uncomfortable with the valuation of the deal, has backed out of the bidding process, while Tractor and Farm Equipment (TAFE) is also believed to have pulled out of the race. The final bids have seen the list of bidders for Punjab Tractors coming down significantly. That list includes Sonalika (International Tractors), Escorts, Italian tractor company Same Duetz-Fahr and a private equity consortium that was backing Punjab Tractors’ former boss Yash Mahajan.
Meanwhile, the Tata Group has acquired a car making plant in Pretoria in South Africa for an undisclosed amount, which will be used as a base for Tata Motors exports to Europe, besides catering to the South African market.
Read the articles in DNA Money and Business Standard.
Related Post: Actis and the Burmans seek re-bids for Punjab Tractors
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