MUMBAI (Bloomberg) -- Mahindra & Mahindra has agreed to buy Italian car designer Pininfarina in a deal worth about 168 million euros ($185 million), underscoring the Indian vehicle maker’s international ambitions.
"The legendary high-end design credentials of Pininfarina will significantly enhance the design capabilities of the entire Mahindra group," Chairman Anand Mahindra said in a statement today. "Given the increasing design sensibilities of today's consumers, product design will greatly influence customer choice."
The takeover of Pininfarina marks the latest international expansion by Mahindra following its acquisitions of South Korean carmaker Ssangyong and the motorcycle unit of PSA/Peugeot-Citroen. Pininfarina already cooperates with Mumbai-based Mahindra on SUV development and worked with it on the Halo electric sports-car concept unveiled last year.
Mahindra, together with affiliate Tech Mahindra Ltd., will buy a 76 percent stake from the Pincar holding company for 25.3 million euros, or the equivalent of 1.10 euros a share, the company said in the statement. Mahindra will offer the same price for the remaining stock, which closed Friday almost four times higher at 4.20 euros.
In addition to buying stock, Mahindra will invest 20 million euros in Pininfarina and provide a guarantee to creditors of 114.5 million euros.
Pininfarina is "a jewel," Tech Mahindra’s CEO Chander Prakash Gurnani said at a press conference in Turin. “It will continue to be polished. It will continue to be built better now we have the financial muscles to build it.”
Founded in 1930, Turin-based Pininfarina has designed automotive classics such as the Ferrari 250 GT, Ferrari Testarossa and the 1950s-era Alfa Romeo Giulietta Spider. Pininfarina has been unprofitable for 10 of the past 11 years while struggling with debt. The company shut a floundering division that built cars for other manufacturers three years ago.
Following the Mahindra deal, Pininfarina will remain an independent company with a separate listing in Milan. Paolo Pininfarina, a grandson of the company’s founder, is also set to remain chairman. The deal is expected to close in the first half of 2016.
Mahindra first approached Pininfarina at the beginning of this year but its links to Pininfarina go back to 2013 when the Indian company hired Hubert Tassin, a former Pininfarina designer.
The Italian company has been losing money for years, partly because automakers have brought design in-house rather than hire independent design firms.