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Maruti Suzuki India announced on Tuesday that its board has granted approval for the execution of a share purchase agreement to acquire the entire equity capital of Suzuki Motor Gujarat (SMG) from Suzuki Motor Corporation of Japan. Maruti Suzuki will issue its shares to SMC as part of this arrangement, opting for stock issuance instead of cash. The company will acquire a total of 1,284,110,750 equity shares for a purchase consideration of INR 12,841.1 crore. Maruti will offer 1,232,251,400 shares of the company to SMC at INR 10,420.85 per equity share.

This marks the first time that Maruti has publicly disclosed the value of the Gujarat plant, with the initial announcement of the plant acquisition made in July. Shareholder approval is required for this transaction, and the automaker is scheduled to release its second-quarter financial results on October 27. The deal will result in an increase in Suzuki Motor Corp.’s effective ownership in Maruti Suzuki by 1.7 percent, reaching 58.19 percent.

The voting process for shareholder approval begins on Wednesday and will continue for one month. In August, the company’s board sanctioned the issuance of shares to SMC on a preferential basis as part of the acquisition of a 100 percent stake in SMG. Following the acquisition, SMG will become a wholly-owned subsidiary of MSI. Maruti Suzuki India’s board, in a meeting on July 31, 2023, approved the termination of the contract manufacturing agreement with SMG and the acquisition of SMG’s shares at a price determined by applicable laws and regulations.

MSI has announced its intention to acquire its parent company SMC’s production facility located in Gujarat, with the aim of streamlining operations and consolidating all manufacturing activities under a single entity in India. The company stated, “Considering the growth of the Indian automobile market and export opportunities, the company will need to increase its production capacity to nearly 4 million vehicles per year by 2030-31, almost doubling current levels.”

SMG, a fully-owned subsidiary of SMC, exclusively supplies its entire production to Maruti Suzuki India. SMG reported a turnover of INR 31,852.5 crore in the last fiscal year ending on March 31, 2023. Established in 2014, SMG operates a production facility in Gujarat with an installed capacity of 750,000 units annually.

Maruti’s first electric vehicle, an SUV, is set to be manufactured at the Gujarat plant. The company plans to introduce six electric vehicle models by 2030, all of which will be produced at this facility, as reported by Reuters. MSI shares concluded the day with a 0.02 percent decrease, trading at INR 10,706.15 each on the BSE.

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