Competition watchdog CCI has given its approval to conglomerate Mahindra & Mahindra Group’s (M&M) proposed multi-structured deal with Spain’s auto component maker CIE Group, saying the deal will not have adverse effect on competition.
As per the deal, CIE would consolidate its European forgings businesses with Mahindra Systech firms that comprises of Mahindra Forgings, Mahindra Composites, Mahindra Castings, Mahindra Investments (India), Mahindra Gears International and MUSCO, into one entity — Mahindra CIE Automotive.
In its order dated August 21, but made public today, the Competition Commission of India (CCI) said that “the proposed combination is not likely to have appreciable adverse effect on competition in India and therefore, the Commission hereby approves the proposed combination under… (Competition) Act”.
The Competition watchdog observed that the deal did not “contemplate combination of two existing players in the Indian auto component manufacturing business”.
Further, after the implementation of the deal, M&M would continue to be present as a shareholder of Mahindra CIE with a holding of 20.04 per cent, it said.
The CCI also noted that CIE Group had no presence in the auto component business in India as well as no investments in Indian firms involved in auto component businesses.
The regulator also noted that the technologies currently being used by the Mahindra Systech firms would continue to be utilised after deal comes into effect.
M&M and CIE Group had entered into various agreements on June 15, 2013 following which they had approached CCI for its approval.
The deal comprises a series of steps such as acquisition of stake in Mahindra Forgings, Mahindra Composites and Mahindra Castings by a CIE group company, Participaciones Internacionales Autometal.
Besides, Mahindra Overseas Investment Company would acquire 13.5 per cent stake in CIE Group.
Following these acquisitions, Mahindra Composites, Mahindra Castings, MUSCO, Mahindra Gears International and Mahindra Investments (India) and CIE’s Participaciones Internacionales Autometal Tres would be merged with Mahindra Forgings, which would be then renamed as Mahindra CIE Automotive.