Mahindra & Mahindra (M&M) and US-automaker Ford Motor Company announced Friday that it will not complete a previously announced automotive joint venture (JV) between their companies. The action followed passing of the December 31, “longstop”, or expiration, date of a definitive agreement the organisations entered into in October 2019.
Speaking about the matter Pawan Goenka, managing director, M&M said, “Given the fundamental changes in the global economic and business conditions, caused in part by the pandemic, both partners decided that we should not extend the date of the business transfer agreement, and therefore as of midnight business transfer agreement expired and there will be no further discussion that will happen on the JV between Mahindra and Ford”.
He said those changes influenced separate decisions by Ford and M&M to reassess their respective capital allocation priorities.
Giving up majority control in its India operations, Ford was said to transfer these to a joint venture formed with M&M. While M&M was supposed to own a 51 per cent controlling stake in the JV valued at $275 million or Rs 1,925 crore, Ford was to hold 49 per cent.
M&M and Ford had signed a definitive agreement to create a JV that will develop, market and distribute Ford vehicles in India and Ford brand and M&M brand vehicles in high-growth emerging markets around the world.
Anish Shah, deputy MD and Group CFO, M&M said, “We will continue to look at opportunities to collaborate together, but not go ahead with the JV as announced”. However, M&M reiterated that this decision will not have any impact on its product plan. FE
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