Mumbai: Mahindra CIE Automotive has agreed to acquire automotive forging company Bill Forge in a cash and stock deal worth Rs 133.2 2 1 crore.The Indo-Spanish component maker expects this to help it diversify its business and add to its revenues and margins in the Asian market.

As per the agreement, about half of the acquisition cost of Mahindra CIE will be generated through internal cash, with Bengaluru-based Bill Forge shareholders being allotted 31.99 lakh shares on a preferential basis at a price of Rs 200 per share. The company will also issue 22.5 million shares to CIE subsidiary PIA2 at the same price to maintain CIE’s ownership of more than 51% in Mahindraa CIE and restore the Spanish industrial group’s confidence in the Indian joint venture. /P After the completion of the acquisition, the shareholding of CIE subsidiary PIA in Mahindraa CIE will be 51.39% and the shareholding of MVML, a subsidiary of the Mahindra Group, will be reduced to 17.26%. Bill Forge, the current promoter, will get 8.46% stake.

The board of Mahindra CIE has decided to raise Rs 70 crore through public or private equity funds, convertible debentures or other equity related securities to clean up the balance sheet and prepare for new opportunities.

Bill Forge led by first generation entrepreneur Anilili Haridass caught the attention of Mahindra CIE even before Capital, a private equity fund led by Manish Kejriwal Kedarara, invested in the company in 2015.

Mahindra CIE had considered merging the company with Bill Forge, but ultimately decided against it as the merger would have required a lengthy legal process and froze its capital structure for at least a year. Hemant Luthra, Chairman of Mahindra CIE, said that the acquisition of Bill Forge was complementary and that the two companies had a strong geographic, product and cultural fit.

Luthra told the Economic Times, “Optimization is over. Otherwise, I would say we are doing well.

CIE, Mahindra CIE went into optimization mode, focusing on controlling capex, reducing debt and finding ways to transform its European business. The Bill Forge acquisition marks the beginning of the expansion phase for Mahindra CIE.

The acquisition will significantly enhance CIE’s sales and profitability in the Asian markets and further enhance Mahindra’s forging capabilities.