Vehicle maker Mahindra and Mahindra Ltd said on Thursday it would buy a 33 per cent voting stake in the agricultural machinery-making unit of Mitsubishi Heavy Industries Lt for $25 million.
The investment is being made through the issue of common shares and class A non-voting shares of Japan's Mitsubishi Agricultural Machinery Co Ltd, and the deal is expected to close by Oct. 1, the companies said in a joint statement.
"This will enable strategic growth avenues for MAM through Mahindra USA, China and other international markets, thereby speeding up international expansion. It will also provide a platform for both the companies to leverage technology and product development synergies," said Rajesh Jejurikar, president and chief executive of Mahindra's farm equipment and two wheeler division.
Mitsubishi Agricultural makes farm equipment such as tractors, power tillers, rice planters and combine harvesters for sale globally. It brought in about $408 million in revenue for the fiscal year 2015.
Mahindra, which is the world's largest maker of tractors by volume, said the deal would help both companies cut cost and improve their supply chain.
Prospects In Africa
Meanwhile, leading Indian tractor manufacturer Escorts Limited is buoyant about its prospects in Africa after its latest products got positive response at the largest farmers' trade fair in the continent.
Escorts Limited a was among the more than 600 exhibitors from 10 countries at the annual three-day NAMPO Trade Fair 2015 in Bloemfontein, heartland of South African farming, to show its renowned Farmtrac Heritage Series tractors.
Eyeing to further consolidate its 15-year presence in the South African market and beyond, Escorts put on display its four-wheel drive and two-wheel drive variants of its fuel efficient, ergonomically engineered Farmtrac Heritage Series tractors.
"Farmtrac Heritage Series is a star performer for Escorts Ltd and has established unparallelled benchmarks even in European markets," said Rajesh Kumar, vice president for international business at Escorts Agri Machinery.
The South African tractor industry currently stands at 6,000 units a year.