Indian multinational car manufacturing company, Mahindra & Mahindra (M&M), will be acquiring 55 per cent stake in Meru Travel. As per the agreement, post a cash investment of Rs 201.5 crore in Meru, M&M will not only have the right to appoint most of the directors on the board of Meru but will also have a say in its composition.
A share subscription and shareholder agreement to this effect was signed on 31 August , which makes Meru a subsidiary of M&M. All the subsidiaries of M&M, that is, Meru Mobility Tech, V-Link Automotive Services, and V-Link Fleet Solutions will also become subsidiaries of M&M.
A primary investment of Rs 103.5 crore will help M&M acquire 55 per cent stake in Meru, which will happen by issuing new shares. M&M has the option to purchase the remaining 45 per cent stake in Meru from existing investors for up to ?98 crore. It is expected to make the first round of investment in Meru by October end.
Meru, which was incorporated in December 2006, is the only profitable Indian cab aggregator presently. With M&M investing, Meru will be able to progress further on a new course of growth. Now, M&M will look at tapping the sharing and rental mobility space with Meru since car sales alone cannot ensure growth, more so when the automobile sector is going through the worst phase ever.