M&M to acquire 55% stake in Meru for cash consideration of up to ₹201.5 crore1 min read . Updated: 01 Sep 2019, 01:34 PM IST
- Under the agreement, Mahindra & Mahindra will have the right to appoint majority of the directors on the board of Meru and will control its composition
- Under the deal structure, M&M will make a primary investment of an amount not exceeding ₹103.5 crore for a stake of up to 55% in Meru in tranches
New Delhi: Mahindra & Mahindra, homegrown utility vehicles major, is acquiring 55% stake in ride hailing and radio taxi operator Meru Travel Solutions for a cash consideration of up to ₹201.5 crore, according to a regulatory filing by the company.
The company signed a share subscription and shareholder agreement on Saturday for subscribing up to 55% 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 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.
As per the filing, the acquisition will be through cash consideration and M&M would invest an amount not exceeding ₹201.5 crore in Meru.
Under the deal structure, M&M will make a primary investment of an amount not exceeding ₹103.5 crore for a stake of up to 55% 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 ₹98 crore, it added.
Meru, which was incorporated in December 2006, had clocked consolidated revenue of ₹156.6 crore in 2018-19, ₹189.9 crore in 2017-18 and ₹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 ₹2,100 crore) in India's ride hailing major Ola.