NEW DELHI: Japanese auto major Nissan Motor Company today agreed to sell all its shares in the three joint venture companies it had formed with Ashok LeylandBSE -0.34 % to the Indian company.
“Under the agreement signed on September 7, 2016, by senior executives of Nissan and Ashok Leyland, these joint ventures will become wholly-owned Ashok LeylandBSE -0.34 % subsidiaries, upon receipt of all necessary approvals from the regulatory authorities in India”, the companies said in a statement. The process is expected to be concluded later this year.
Ashok Leyland and Nissan had formed three JVs – Ashok Leyland Nissan Vehicles Ltd (ALNVL) for vehicle manufacturing; Nissan Ashok Leyland Power Train Ltd (NALPT) for making powertrains and Nissan Ashok Leyland Technologies Ltd (NALT), which is a technology joint venture – in May 2008. The partners have invested about Rs 1,000 crore as equity between them.
As per the new restructuring agreement, Ashok Leyland will continue to build under a licensing agreement light commercial vehicles Dost and Partner, which are based on Nissan’s design, engineering, and technology. Servicing and parts availability for customers will be ensured by a technical support arrangement. In addition, the two companies have agreed to continue a deal to procure made-in-India parts to Nissan.
Philippe Guerin-Boutaud, Nissan corporate vice president in charge of the Global LCV Business Unit, said, “We are pleased to be moving forward into a new phase of our business with Ashok Leyland.” The development brings to an end month of acrimony between the two partners Vinod Dasari, managing director, Ashok Leyland, said, “We have decided to acquire Nissan’s stake in the three joint venture companies, and this will help focus our efforts to concentrate on our core business initiatives and our customers. We will continue our relationship with Nissan under the new arrangement”.
Recent Articles on M&A
Source: Economic Times