Mahindra acquires Pininfarina for $28 million

Pininfarina SpA, the Italian car designing firm has sealed talks to be acquired by Tech Mahindra, a subsidiary of Mahindra & Mahindra . Pininfarina is acclaimed for designing cars from Ferrari, Maserati, Rolls-Royce and Cadillac. Mahindra will acquire 76 percent stake in the Italian firm for $28 million.

The talks on the acquisition of Pininfarina by Mahindra has been in the news for last two years and the designer company found Mahindra to be a suitable buyer. The announcement of Tech Mahindra as the lead company, instead of Mahindra and Mahindra has surprised many.

According to experts on the matter,  the move to use Tech Mahindra as the vehicle to acquire Pininfarina is significant, as it better enables the Italian car design firm to retain its distinctive character, which may have been lost had M&M acquired it. Rivals in India and overseas may not have been too comfortable dealing with Pininfarina, if it was an M&M subsidiary. Also, Tech Mahindra may have synergies to offer in terms of design software, they said.

For last many a years, Pininfarina has been making losses for years and its net debt stood at $57 million in June 2015. It will be interesting to see how Mahindra would make use of this acquisition in designing their vehicles in the future.