Ford and Mahindra and Mahindra have called off a deal to form a joint venture company that involved the acquisition of the former’s India business, citing greater-than-expected capital needs and the changed business landscape in the aftermath of the pandemic.
The companies separately said that they amicably reached the decision to not pursue the joint venture, seeking instead the option to re-deploy elsewhere the earmarked capital. December 31 was the hard stop date for the companies to reach a definitive transfer agreement.
Ford said it will continue to have independent operations in India.
“All the assumptions and scenarios that we had while signing the agreement are very different today,” said Pawan Goenka, managing director of Mahindra and Mahindra.
The deal did not make economic sense after the capital that both companies had to put in was enhanced due to Covid-19 related issues and other global developments, according to Anish Shah, the deputy managing director and CFO of the Mahindra Group.
“The objectives were not being met and the capital required for the business was much higher; hence we are looking at different ways of collaborating,” Shah said. M&M had talked about investing ₹1,400 crore of equity into the proposed JV and an equivalent amount as the debt.