The board of Maruti Suzuki India has approved the allotment of more than 1.23 crore shares to its parent Suzuki Motor Corporation to buy 100% stake in Suzuki Motor Gujarat. The company’s board has approved the allotment of 1,23,22,514 shares to Suzuki Motor Gujarat, whose face value is Rs 5/share and price Rs 10,420.85/share.
According to the valuation report released by RBSA Valuation Advisors LLP, the price of Rs 10,420.85/share approved by the board of Maruti Suzuki is equivalent to Rs 12,841.1 crore in value terms.
What will be the stake in Maruti Suzuki India?
With this allotment, Suzuki Motor Corporation’s stake in Maruti Suzuki India will increase from 56.48% to 58.19%. Last week, Maruti Suzuki shareholders had approved the issuance of shares to Suzuki Motor Gujarat on preferential basis. Its objective was to buy 100% stake in Suzuki Motor Gujarat.
After this deal, Suzuki Motor Corporation’s stake in Maruti Suzuki India will increase from 56.48% to 58.19%.
The board of Maruti Suzuki India, in its meeting held on July 31, 2023, had approved termination of the contract manufacturing contract with Suzuki Motor Gujarat. He had also given permission to Suzuki Motor Gujarat to acquire its shares. He had said that the share price will be decided as per all the laws and rules.
What is the purpose of purchase?
Maruti Suzuki India Chairman RC Bhargava had said that the share swap method adopted for the acquisition of Suzuki Motor Gujarat is better for the company’s shareholders. He reiterated that the purpose of the acquisition was to bring the production operations under one management. It was necessary to do this for the future growth of the company, because it has set a target of achieving a total production of 40 lakh units by 2030-31.
Since 2014, Suzuki Motor Corporation has invested Rs 18,000 crore in Suzuki Motor Gujarat. Suzuki Motor Gujarat is a wholly owned subsidiary of Suzuki Motor Corporation and supplies its entire production to Maruti Suzuki India. Suzuki Motor Gujarat was started in 2014. It has a factory in Gujarat whose capacity is 7.5 lakh units annually.
