Mahindra & Mahindra and Ford India on Wednesday formally dissolved a decade-old relationship, selling their respective holdings in the other company.
M&M sold its 15.88 per cent stake in Ford for an unspecified amount while the US-based carmaker sold its 5.16 per cent stake in the Indian firm for Rs 288.85 crore (Rs 2.89 billion). The M&M stock's price gained 1.99 per cent to close at Rs 485.30. Ford India is not listed on the Indian bourses.
Ford sold its M&M shares in a block deal of 5.98 million shares in early trades on the Bombay Stock Exchange at Rs 483 per share. The identity of the buyer is unknown but market sources have indicated that it could be a financial institution or a private equity fund.
In either case, the promoters' holding in the company, which included Ford's holding too, will come down from 24.35 per cent to 19.19 per cent.
Earlier this month, M&M entered into a 51:49 equity partnership with French carmaker Renault to manufacture and market a C-segment car in India.
Ford India also sells C-segment cars in the country but M&M officials deny that the stake sale had anything to do with the Renault partnership.
Anand Mahindra, vice-chairman of M&M, had earlier said, "Our stake in Ford represents a good portfolio investment and we will sell it when we think we can get the best value for our investment."
According to company sources, the M&M-Ford relationship did not impose any operational or competitive restrictions on each other. Company Secretary Arun Nanda added today that the two companies continued to share a good relationship.
In the mid-1990s, Ford entered India through a joint venture with M&M in which Ford held a 49 per cent stake and M&M held the controlling 51 per cent. Over the next few years, Ford increased its stake in the venture to nearly 85 per cent, while M&M handed over operational control to Ford.
However, both Ford India and Mahindra continued to have a member each on the other's board.
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