The world’s fourth largest tractor company Mahindra & Mahindra (M&M) has made its first overseas acquisition in the tractor sector. The company has inked an MoU with Jiangling Motor Corporation (JMC) of group of China to enter into a joint venture. The JV, in turn, will acquire the tractor manufacturing assets from Jiangling Tractor Company (JTC), a subsidiary of JMCG.The deal has been struck at $10 million of which Mahindra & Mahindra will invest $8 million. The Indian company in turn will acquire a 80 per cent stake in the joint venture. M&M has said in a notice issued to the stock exchange , Mumbai (BSE), ‘‘The finalisation of the transaction is subject to certain conditions precedent and regulatory approvals, as may be required’’.The deal comes a few months after M&M failed in its bid to acquire the Finnish tractor company for euro 350 million. If the Valtra deal had gone through, it would have made M&M the world’s third largest tractor company. However, it had been outbid by US company Agco, which submitted a bid that was about two times than that of M&M.The deal marks the entry of M&M into one of the world’s premier tractor markets. The world’s three largest tractor markets are US, China and India. China accaounts for about 20 per cent of the global tractor market.Jiangling Tractor Company will provide the joint venture with a strong manufacturing base. JMC is a state-owned truck company in which US-based Ford acquired a 20 per cent stake a few years back.
