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Maruti to merge Suzuki Powertrain with itself
Posted on 13 Jun 20124,515 Views Comments
The merger would see SPIL being spun into Maruti Suzuki by December 2012, in exchange for Maruti Suzuki shares that are valued at about 1,500 crore
The board of Maruti Suzuki, India's largest carmaker, has proposed to merge Suzuki Powertrain India Ltd (SPIL), the diesel engine and transmission firm with itself, by entering into a stock swap transaction with its Japanese parent Suzuki Motor. The merger will not result in any cash outflow.
The move is seen as a bid by the Japanese carmaker to align the engine manufacturer with the expansion plans of Maruti Suzuki, which is planning to increase production capacities of its diesel powered cars.
The merger would see SPIL being spun into Maruti Suzuki by December, this year, in exchange for Maruti Suzuki shares that are valued at about 1,500 crore ($268 million).
The swap ratio has been fixed at 1:70 whereby Suzuki would receive one share of Maruti (of Rs 5 each) for every 70 SPIL shares (of Rs 10 each) that will take parent's stake to 56.21% from the current 54.2%. Maruti would issue fresh 13.17 million shares to close the transaction, thus increasing its paid-up capital by Rs 6.5 crore.
"It is expected that the necessary regulatory approvals and legal requirements for the merger may be completed by end December 2012. Once the merger is approved, the books of accounts of SPIL will be merged with MSI with effect from April 1, 2012," the company said in a statement.
Maruti Suzuki shares rose 3.34% to Rs 1,146.30 at close of trading at the BSE on Tuesday. The merger will enable Maruti Suzuki to align the expansion of the diesel engine maker with its own expansion plans, as demand for diesel engine cars outpace petrol fueled cars in India.
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