M&M To Acquire Majority Stake In Meru Cabs
M&M will make a primary investment of an amount not exceeding Rs 103.5 crore as per the deal structure.
Mahindra & Mahindra Ltd. is acquiring 55 percent stake in ride hailing and radio taxi operator Meru Travel Solutions for a cash consideration of up to Rs 201.5 crore.
The company signed a share subscription and shareholder agreement on Saturday for subscribing up to 55 percent of equity share capital of Meru Travel Solutions Pvt. Ltd. in tranches, Mahindra & Mahindra said in a BSE filing.
Under the agreement, after investment of the first tranche in Meru, M&M will have the right to appoint majority of the directors on the board of Meru and will control its composition, it added.
"Upon obtaining such right, Meru will become a subsidiary of the company," M&M said, adding that subsidiaries of Meru -- Meru Mobility Tech Pvt. Ltd., V-Link Automotive Services Pvt. Ltd. and V-Link Fleet Solutions Pvt. Ltd. -- would in turn also become subsidiaries of M&M.
The acquisition will be through cash consideration and M&M would invest an amount not exceeding Rs 201.5 crore in Meru. according to the filing.
Under the deal structure, M&M will make a primary investment of an amount not exceeding Rs 103.5 crore for a stake of up to 55 percent in Meru in tranches.
The agreement also envisages M&M to have the right of call option to acquire shares from certain existing investors of Meru and these existing investors of Meru would have put option to sell shares for an amount not exceeding Rs 98 crore, it added.
Meru, which was incorporated in December 2006, had clocked consolidated revenue of Rs 156.6 crore in 2018-19, Rs 189.9 crore in 2017-18 and Rs 277.2 crore in 2016-17.
As automobile companies adapt to the changing times, they have been making investments in new technology driven mobility solutions providers. Earlier this year, South Korea's Hyundai and Kia together had announced that they were investing $300 million (about Rs 2,100 crore) in India's ride hailing major Ola.