SML Isuzu shares hit 10% lower circuit in early deals, here's why 

Shares of heavy vehicle maker SML Isuzu Ltd hit a lower circuit of 10% in early deals after auto major Mahindra & Mahindra said it would buy stake in the firm. M&M inked an agreement to acquire a 58.96 percent stake in SML Isuzu at Rs 650 per share, which is an outlay of Rs 555 crore to bolster its truck and bus business. In addition, M&M also made an open offer under SEBI's takeover regulations. The offer is for the acquisition of up to 37.62 lakh fully paid shares amounting to 26% of the voting share capital of the target company.

The open offer price amounts to a 12% discount to the previous close of Rs 1766.70. This dampened sentiment around the SML Isuzu stock in early deals today. 

The stock slipped 10% to Rs 1590.05 on BSE with its market cap slipping to Rs 2,301.06 crore.  On the other hand, Mahindra and Mahindra's stock price rose 1.3 percent to Rs 2,900 on BSE.

M&M will acquire the entire stake of 43.96 percent held by Sumitomo Corporation, the promoter of SML, and separately also buy 15 percent held by Isuzu Motors Ltd, public shareholder of SML, for an aggregate consideration of Rs 555 crore.

The acquisition will double Mahindra's market share in the trucks and buses segment of India's fast-growing economy to six percent, with a plan to raise that to 12 percent by fiscal year 2031, it said.

"The proposed acquisition is a step towards establishing a strong presence in the >3.5T CV segment, where M&M has a three percent market share today, as compared to a 52 percent market share in the

SML Isuzu is primarily engaged in the business of manufacture and sale of Commercial Vehicles and their parts. The Company has its operations primarily in India.