M&M & Ford call off the auto joint venture
Mahindra & Mahindra (M&M) and Ford Motor Company on Friday, January 1, 2021, have mutually and amicably determined that they will not further pursue their Joint Venture plan.
In an official statement, Mahindra & Mahindra said, "Mahindra & Mahindra, a part of the USD 19.4 billion Mahindra Group and Ford Motor Company have mutually, amicably determined they will not complete a previously announced automotive joint venture between their companies. The action followed passing of the December 31, "longstop", or expiration, date of a definitive agreement the organizations entered into in October 2019."
According to the companies, the outcome was driven by fundamental changes in global economic and business conditions – caused, in part, by the global pandemic – since the agreement was first announced. Those changes influenced separate decisions by Ford and Mahindra to reassess their respective capital allocation priorities.
Mahindra said that this decision will not have any impact on its product plan. It is well-positioned in its core true SUV DNA and product platforms with a strong focus on financial performance. Also, Mahindra is accelerating its efforts to establish leadership in electric SUVs.
Mahindra & Mahindra along with Ford Motor Company Inc., USA ("FMC") had executed in October 2019 a Business Transfer Agreement and Share Subscription Agreement ("the Agreements") to enable the formation of a joint venture by way of the Company and/ or its subsidiaries acquiring 51% of the equity share capital of Ardour Automotive Private Limited, a wholly-owned subsidiary of FMC ("NewCo") in India. The balance 49% equity shareholding in NewCo was to be held by FMC and/or any of its affiliates
As per the business transfer agreement, NewCo was to acquire the automotive business of Ford India Private Limited ("FIPL"), a wholly-owned subsidiary of FMC. Upon completion of the aforesaid business transfer, the Agreements contemplated the execution of a Joint Venture Agreement and other ancillary documents between the Company and/or its Subsidiaries and FMC and/ or any of its affiliates.