NewsApp (Free)

Read news as it happens
Download NewsApp

Available on  

Rediff News  All News  » Business » Maruti to merge Suzuki Powertrain

Maruti to merge Suzuki Powertrain

June 12, 2012 13:28 IST

MarutiMaruti Suzuki said on Tuesday its Japanese parent Suzuki Motor Corporation's stake in the company will go up to 56.2 per cent following merger of Suzuki Powertrain with India's largest carmaker.

"The board of directors of Maruti Suzuki India on Tuesday approved a proposal to merge Suzuki Powertrain India Ltdwith MSI," the company said in a statement.

SPIL, which supplies diesel engines and transmissions to MSI, is a subsidiary of Suzuki Motor Corporation.

SMC holds a 70 per cent stake in SPIL, while the rest is held by MSI, it added.

"Consequent to the merger, SMC's holding in MSI will go up from 54.2 per cent to 56.2 per cent. . . MSI proposes to make a fresh issue of 13.17 million shares to SMC in lieu of SMC's 70 per cent holding in SPIL," MSI said.

The domestic car market leader said there will be no cash outflow from MSI as the merger is proposed to be effected through a share swap agreement.

As per the understanding, the swap ratio has been fixed at 1:70, which means SMC will receive one share of MSI of Rs 5 each for every 70 shares of Rs 10

each it holds in SPIL.

"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.

"There are no plans to reduce jobs, following this merger," it added.

Reacting to the announcement, the shares of MSI were trading 1.14 per cent up at Rs 1,121.90 apiece on the BSE in the afternoon.

With completion of this merger, MSI will bring its entire diesel engine capacity under a single management control.

"All key initiatives to strengthen the business, including sourcing, localisation, production planning, manufacturing flexibility and cost reduction can be controlled, monitored and improved by the MSI management," the company said.

MSI further said the proposed merger will also benefit the combined entity through synergies in areas like finance, capital structuring, administration and consequent reduction of transaction costs.

© Copyright 2018 PTI. All rights reserved. Republication or redistribution of PTI content, including by framing or similar means, is expressly prohibited without the prior written consent.