The Telegraph
Since 1st March, 1999
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Valtra out of reach for the Mahindras

Mumbai, Sept. 10: The Mahindras lost a widely-watched bid for Finnish Valtra to US’ Agco. With it slipped away a chance to move forward to its goal of emerging as one the world’s frontline tractor companies.

Agco won the race hands down, having offered 600 million Euros for the tractor business of Valtra compared with Mahindra & Mahindra’s modest 350 million euros.

The M&M bid, which worked out to $ 378 million or Rs 1,722.35 crore, billed as the largest overseas bid made by a private Indian firm. Analysts said M&M’s bid was an attempt to gain a foothold in Europe, and to be a high horse-power tractor major in Europe and USA.

Winning Valtra would have helped the Mahindras acquire advanced technology to make tractors at a time when John Deere and Ford New Holland were making their presence felt in India. The other bidders who lost the Valtra race were tractor makers Same, Klaas and Ponsse.

Curiously, the M&M share price zoomed Rs 12.85, or 6.3 per cent, to Rs 214.75. Some analysts said this could have happened because of investor concerns that bagging Valtra’s tractor business would have crimped M&M’s finances at just the time its fortunes were looking up.

The tractor industry has been looking good after four years, while Mahindra’s Scorpio, their utility vehicle, has been a big success story.

However, analysts agree that the company will now have to expand in Europe and Latin America on the back of its own strength.

The Valtra deal was expected to be a ring fenced deal — like Tata-Tetley — that would have seen the Mahindras float a special purpose vehicle to acquire the Helsinki-headquartered company.

M&M, through its wholly owned subsidiary-Mahindra USA, has already made an impact in the North American market. It has been in the US for more than a decade. Analysts say the domestic tractor market will turn around within the current financial year.

Analysts claim that the oversupply of tractors at the dealer's end has now come to an end, as most tractor makers have over the months focussed their attention on exhausting their stocks at dealer points. Further, it is expected that low interest rates and a better monsoon would help in fuelling demand for tractors.

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