In what is claimed to be a significant development at Mahindra, the diversified Indian multinational is said to have entered into an agreement with a Spanish auto firm CIE Automotive SA to let it pick up a majority stake in Systech. Systech is Mahindra’s auto component business vertical with entities that manufacture auto components and modules. If industry sources are to be believed, Mahindra will merge all its auto components businesses into its Mahindra Forgings unit, which will be renamed Mahindra CIE Automotive. CIE will hold 51% and Mahindra will own about 20%. The rest will be held by institutional and public shareholders. Sources also claim that Mahindra would be acquiring a 13.5 percent stake in CIE for Euro 94.24 million. The deal is therefore suggestive of a form where CIE Automotive will acquire from M&M, a stake in its listed and unlisted companies belonging to Systech Automotive Component business for Rs 670 crore. M&M would thereafter consolidate all Mahindra Systech Auto Component companies and CIE European Forgings into one listed entity in India, Mahindra CIE. M&M also gets board representation as part of the deal with Hemant Luthra, President, Mahindra Systech and Group CIO VS Parthasarathy nominated as directors to the CIE Board. according to the deal.
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