India's Mahindra to buy 51 per cent stake in France's struggling Peugeot scooter unit

NEW DELHI (AFP) - Leading Indian vehicle manufacturer Mahindra announced on Tuesday plans to buy a majority stake in France's struggling Peugeot Motorcycles, the world's oldest motorbike-maker, as it seeks new technology to drive sales.

Mahindra Two Wheelers, an unlisted arm of Mahindra & Mahindra, said its "binding offer" for the 51-per cent stake would involve a 15-million-euro (S$24-million) injection into Peugeot Motorcycles, a subsidiary of Paris-based PSA Group, which has been seeking to engineer a turnaround.

In a statement, Mahindra, part of the US$16.5-billion (S$21-billion) Mahindra Group, gave no details of the purchase price but called the deal, subject to French labour legislation, a "win-win" for both companies.

"The coming together of Mahindra and Peugeot is a win-win for the two-wheeler business for both companies," said Mahindra & Mahindra executive director Pawan Goenka. He offered assurances Peugeot Motorcycles would retain its French identity under the Indian firm's takeover.

Mahindra & Mahindra, India's biggest sports utility vehicle and tractor-maker, is the flagship of the Mahindra Group led by industrialist Anand Mahindra, a member of one of India's richest business families and known as a hands-on boss.

The merger will give Peugeot Motorcycles access to the world's largest two-wheeler market. It could also help Mahindra, still a small player in the Indian two-wheeler segment, gain sales traction at home against local rivals Hero MotoCorp and Honda, and in Europe. Two-wheeler sales outstrip car sales in India by a massive margin.

"Mahindra would offer access to the India market, mass-market product technology and competence in marketing while Peugeot brings premium range, a strong European footprint and a globally recognised brand," Goenka said.

Mahindra, which got into the motorcycle business six years ago when it bought Kinetic Motor, has been seeking to strengthen its two-wheeler position globally in Latin America, Africa and South Asia.

The management strategy outlined by Mahindra for Peugeot Motorcycles is in line with the one the Indian company followed in its US$378-million purchase in 2011 of a 70-per cent stake in South Korean automaker SsangYong which was then in bankruptcy protection.