SUMMARY
The acquisition of INR 201.5 Cr will be completed in multiple tranches
Mahindra can appoint new directors on Meru’s board after the first tranche in October
Meru and its subsidiaries will become M&M’s subsidiary
India automobiles major Mahindra & Mahindra is acquiring 55% stake in radio taxi operator Meru Travel Solutions for INR 201.5 Cr.
The company has signed a share subscription and shareholder agreement on Saturday for subscribing up to 55% equity shares in tranches, Mahindra & Mahindra (M&M) said in a BSE filing. The first tranche will be made in October this year.
Under the agreement, M&M will gain the right to appoint a majority of the directors on the board of Meru and will control its composition after the first tranche is paid. After obtaining these rights, Meru will become a subsidiary of M&M.
In addition, Meru’s subsidiaries — Meru Mobility Tech Pvt Ltd, V-Link Automotive Services Pvt Ltd and V-Link Fleet Solutions Pvt Ltd — would, in turn, become M&M subsidiaries as well. As per the filing, the transaction will be through cash considerations.
Under the deal, M&M will make a primary investment of an amount not exceeding INR 103.5 Cr for 55% stakes. The agreement has also given M&M an “on-call” option to acquire share from certain existing investors of Meru. These investors would have to sell the shares for an amount not exceeding INR 98 Cr.
Other shared mobility services such as Ola and Uber are gaining a strong food hold over the market by eating into Meru’s customers. With this new investment, Meru would have more funds to fight the competitors, at the same time, this will be the entry of M&M in the shared mobility services. Meru is likely to fit into the company’s electric vehicle plans as well, and the radio taxi operator could have a large EV fleet soon.
Meru and its subsidiaries had generated consolidated revenue of INR 156.6 Cr in the financial year 2018-19. Meru Mobility Tech generated INR 114.6 Cr, V-Link Automotive accounted for INR 3.3 Cr and V-Link Fleet rose INR 46.6 Cr.
