Mahindra buys Navistar stake in MNAL for Rs 175 crore
Mahindra and Mahindra and Navistar International Corporation launched the Mahindra Navistar Automotives Limited (MNAL) joint venture in 2005 followed by Mahindra Navistar Engines Pvt Ltd (MNEPL) joint venture. The Indo-American combine had invested Rs 1060 crore in the two JVs to manufacture light, medium and heavy commercial vehicles in India.
However, due to cyclical fluctuations in the commercial vehicle market in India and Navistar’s requirements to improve the company’s return on invested capital (ROIC) sooner the American company has decided to pull the plug on the JV.
Mahindra has bought out Navistar’s 49 per cent stake in Mahindra Navistar Automotives (MNAL) for Rs 175 crore to become the sole owner of MNAL and Mahindra Navistar Engines Pvt Ltd (MNEPL).
The deal is expected to be completed in early 2013 as it is subject to conclusion of definitive agreements and requires regulatory approval in India.
The Navistar group will continue to support Mahindra via a licence agreement to extend necessary support to MNAL and MNEPL for business continuity. The agreement also allows Navistar to continue sourcing components from India while Mahindra would continue to provide engineering services to Navistar.