Maruti Suzuki India on Saturday said its shareholders have approved the proposal to issue shares on a preferential basis to Suzuki Motor Corporation (SMC) in consideration for a related party transaction for acquisition of 100 per cent stake in Suzuki Motor Gujarat.
The company had last month sought the approval of its shareholders through a postal vote on two special resolutions seeking the complete takeover of Suzuki Motor Gujarat (SMG).
Resolutions set out in the postal vote regarding the approval of related party transactions, and the creation, offering, issuance and allotment of shares on a preferential basis for consideration other than cash, have been approved by the requisite majority by the members of the company, Maruti Suzuki India said in a regulatory filing.
The first special resolution on related party transactions was approved with 98.21 percent in favor and 1.79 percent against.
The second special resolution to create, offer and allot shares on a preferential basis other than cash consideration to SMC received 98.91 percent of votes in favor and 1.09 percent against, it added.
Last month, the company’s board approved the acquisition of SMG for a total purchase consideration of Rs 12,841.1 crore. It was planned to be waived off through issue and allotment of over 1.23 crore equity shares of the company of face value of Rs 5 each to SMC, at a price of Rs 10,420.85 per equity share.
In August this year, the board of Maruti Suzuki India approved the issue of shares on a preferential basis to SMC in consideration for acquiring 100 percent stake in Suzuki Motor Gujarat.
The transaction will increase SMC’s stake in the company from 56.4 percent currently to 58.28 percent. Post the acquisition, SMG will become a wholly owned subsidiary of Maruti Suzuki India.
The board of MSI, at its meeting on July 31, 2023, approved the termination of the contract manufacturing agreement with SMG and the acquisition of its shares by SMC at a price to be determined in accordance with all applicable laws and regulations.
MSI chairman RC Bhargava had said that the share swap method adopted for the SMG acquisition is much better for the company’s shareholders.
He reiterated that the main objective of the acquisition was to bring the manufacturing operations under one management, taking into account the future growth prospects of the company, when it plans to achieve a total production of 40 lakh units per annum by 2030-31 to have.
Since 2014, SMC has invested Rs 18,000 crore in SMG. SMG is a wholly owned subsidiary of SMC and supplies its entire production exclusively to Maruti Suzuki India.
Founded in 2014, SMG currently has a manufacturing facility in Gujarat with an installed capacity of 7.5 lakh units per annum.
It was initially proposed that the factory in Gujarat would be owned by MSI, but the plan was later changed when SMC announced that it would invest $488 million to build the factory. The plan was opposed by the institutional investors, forcing the company to seek the approval of the minority shareholders on the issue.
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