Mahindra Said to Be Close to Purchase of Pininfarina

  • Final deal for Ferrari designer could be reached in days
  • Mahindra, Pininfarina said to be in talks over price, debt

Mahindra & Mahindra Ltd., India’s largest maker of sport utility vehicles, is close to an agreement to purchase Italian car designer Pininfarina SpA, people familiar with the matter said.

After talks stalled months ago, the companies are now seeking to complete negotiations in the next few days, said the people, who asked not to be identified because the discussions are private. Mahindra and Pininfarina have yet to agree on the final purchase price as well as issues related to the designer’s debt, the people said.

Pincar Srl, Pinfarina’s controlling shareholder, said on Tuesday that talks with Mahindra over the sale of its stake were ongoing and that it will inform investors if any deal is reached. Representatives for Mahindra and Pininfarina didn’t immediately respond to requests for comment.

Italian newspaper Il Sole 24 Ore reported on Tuesday that the talks were in their final stages. Before being halted for a second time, Pininfarina shares surged 21 percent to 4.95 euros, valuing the company at 149 million euros ($166 million).

The takeover of Turin-based Pininfarina, the creator of the Ferrari 458 Spider roadster, marks a move by Mahindra to add flair following its acquisitions of South Korean carmaker Ssangyong and the scooter unit of French auto manufacturer PSA Peugeot Citroen. The designer already cooperates with Mumbai-based Mahindra on SUV development and worked with it on the TUV300 compact SUV, which the company will introduce later this week. 

Bloomberg first reported talks with Mahindra in March, but the deal was delayed after Pininfarina’s creditor banks balked at an earlier proposal by Mahindra.

Pininfarina has been unprofitable for 10 of the past 11 years while struggling with debt. It shut a floundering division that built cars for other manufacturers three years ago. Chairman Paolo Pininfarina, a grandson of the company’s founder, said on April 22 that a new investor will provide “financial solidity and bolster growth in coming years.”

The design firm, established in 1930, has also been involved with creating the Rolls-Royce Camargue, Cadillac Allante and Maserati Quattroporte as well as automotive classics such as the Ferrari 250 GT and Alfa Romeo Giulietta Spider. It has also branched into projects outside the automotive industry, including apartment towers, vending machines and toothbrushes.

When first confirming talks with Mahindra earlier this year, Pincar said it was reviewing several options for the firm jointly with financial institutions. Pincar ceded control of its 76 percent Pininfarina stake to banks as a guarantee for debt restructuring in 2012. Those creditors need to approve any sale.

Mahindra had 67.7 billion rupees ($1.02 billion) in cash and short-term investments as of the end of its fiscal year in March 2015, according to data compiled by Bloomberg.

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