M&M to buy stake in Mitsubishi Heavy's farm machinery unit

Mahindra & Mahindra and Tokyo-based Mitsubishi Heavy Industries (MHI) today entered into a strategic partnership for agricultural machinery.

Under the definitive agreement, M&M will invest $25 million (Rs 160 crore) for acquiring 33% voting stake in MHI subsidiary, Mitsubishi Agricultural Machinery Co (MAM) through fresh issue of common shares and Class A (non voting) shares of MAM. 

The deal is expected to close by October 1. The new funding will be used to increase MAM's capital base.

MAM is a full range agri-machinery company, producing and selling tractors, combine harvesters, rice transplanters and other agri-machinery. The company generated revenues of about $408 million in 2014-15, according to a statement from M&M.

Rajesh Jejurikar, president and chief executive (farm equipment and two-wheeler) M&M said, "This will enable strategic growth avenues for MAM through Mahindra USA, China and other international markets. It will also provide a platform for both the companies to leverage technology and product development synergies."