MUMBAI: Automotive major Mahindra and Mahindra (M&M) has acquired "a controlling stake" in a leading two-wheeler designing firm, Engines Engineering SpA of Italy, it said in a regulatory intimation to the Bombay Stock Exchange on Thursday.
Under the agreement between 100 percent M&M subsidiary Mahindra Systech and the European firm, a new entity called Engines Engineering S.r.L has been formed, with M&M holding a 100 percent stake in it.
Alongside, the $12 million Engines Engineering SpA will also transfer all its business to S.r.L after the necessary approvals come through.
The deal paves the way for the $6.7 billion Mahindra group - which recently entered the passenger car segment with the Logan - to enter the two-wheeler designing and manufacturing segment.
And though neither the regulatory intimation nor Mahindra officials quantified the "controlling stake" that M&M would have in Engines Engineering SpA, the control is likely to be 100 percent as the Italian company would have to transfer its total business to S.r.L., the new company fully-owned by Mahindra.
Earlier, M&M had acquired Italian automotive component manufacturing company Systech, since then rechristened Mahindra Systech. "M&M through Systech has been looking acquisition of a reputed design house," said Systech president Hemant Luthra.
The latest acquisition would enable his company to penetrate Europe, China and Russia, markets serviced by Engines Engineering SpA, Luthra said.
Engines Engineering SpA was set up in 1979 by Alberto Strazzari to design and develop motorcycle prototypes, and has churned out designs for some of the world's most reputed motorcycle manufacturers such as Benelli, Beta, Ducati, Gilera, Honda, LEM, Malaguti and Yamaha.
Till the acquisition is formalised, Strazzari will continue to hold his 85 percent stake in the company, headquartered in Castenaso in Bologna, with three other investors holding the balance.
