M&M to buy Turkish tractor, foundry cos

Mahindra & Mahindra (M&M) on Wednesday said it has signed pacts with Turkey-based Erkunt group to acquire its tractor manufacturing and foundry businesses for about R735 crore, which will help it enhance its product portfolio.

M&M said it will acquire Erkunt Traktor Sanayii for R478 crore, a move which is aimed at entering the fourth largest tractor market in the world.

Besides, it has inked a share purchase agreement to acquire 80% stake in Erkunt Sanayi AS for R257 crore. The entity is engaged in production of engine blocks, cylinder heads and transmission cases.

The transaction is expected to be closed by November 30, 2017.

The Erkunt deal, which comes on the back of the Hisarlar acquisition earlier in the year, is expected to help Mahindra’s farm equipment business in the strategic market of Turkey.

“Turkey is a very important market in our globalisation journey and we wish to participate in its entire agri mechanisation landscape. The acquisition of Erkunt will enable Mahindra to expand its footprint in the world’s fourth largest tractor market,” Mahindra & Mahindra Ltd’s MD Pawan Goenka said.

Mahindra’s strategy for its farm equipment business is to globalise aggressively and also expand its portfolio to include various new categories of tractors and farm machinery, he said. “We will look at farm equipment as a whole for growth. We will continue to grow market share, (and) we will grow with market.”

This acquisition is expected to increase Erkunt’s market share to 8-9% from the current 6%, Goenka added.

The company has decided on markets for both organic and inorganic growth, he added. “We are focusing on small to medium acquisitions which will improve local presence and branding.”

M&M said it will acquire 100% share capital of Erkunt Traktor, thereby giving it access to the Turkish market.

Erkunt Traktor manufactures and markets tractors under Erkunt brand in Turkey. It also exports tractors to various global markets under the ArmaTrac brand.