Maruti Suzuki to issue preferential shares to parent firm Suzuki Motor for Gujarat plant acquisition
Maruti Suzuki's board approved the issuance of equity shares to the SMC on Tuesday
Ahead of the acquisition of Suzuki Motor Corporation(SMC) in Suzuki Motor Gujarat Private Limited (SMG), Maruti Suzuki will issue equity shares on preferential allotment basis to Suzuki Motor Corporation, the company said in its stock filing on Tuesday.
Maruti Suzuki's board approved the issuance of equity shares to the SMC on Tuesday.
The company said that the decision would be subject to applicable regulatory and statutory approvals, as may be required.
After the acquision, SMG will become a wholly owned subsidiary of Maruti Suzuki.
Maruti Suzuki shares were trading 0.63% higher at ₹9575.70 apiece on BSE at 11:16 am on Wednesday.
On July 31, the Maruti Suzuki board had approved the termination of the contract manufacturing agreement (CMA) with Suzuki Motor Gujarat Private(SMG) Limited and acquiring of shares of SMG from Suzuki Motor Corporation (SMC).
The board evaluated two available options for acquiring the SMC equity in SMG, first is payment in cash and issue of MSIL equity shares on a preferential allotment basis.
The impact of both options on the earnings of MSIL was calculated for each year up to 2031.
It was only after the evaluation of all the aspects, the board reached to a decision that the acquision of SMG shares by issue of Maruti Suzuki equity shares to SMC would benefit minority shareholders and Maruti Suzuki.
