India automobiles major Mahindra & Mahindra is acquiring 55% stake in radio taxi operator Meru Travel Solutions for INR 201.5 Cr.
This new Acquisition of Mahindra proves that they believe in Shared Mobility to be the future. Ownership trend may go away and shared vehicle will be the future. Changing Business Model indicator.
Auto major Mahindra & Mahindra is entering the shared mobility space and is acquiring a 55% stake in Meru Cabs for Rs 201.5 crore.
The company said that it is keen to grow its presence in shared mobility space and by acquisition of stake in Meru, it will also enter the corporate shared mobility space, which is an area of strategic interest to it.
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The company has recently inked a share subscription and shareholder agreement on Saturday for subscribing up to 55% equity shares in tranches, Mahindra & Mahindra (M&M) said in a BSE filing. The first installment will be made in October, 2019.
Is it the right time for Mahindra to pull the trigger and enter this shared mobility space?
With decrease in sales of automobiles for personal use, it makes sense to develop a channel where there is growth in demand for their product.
This is a good way to market electric vehicles and to tell the world how superior their product is If they can get cost advantage in the mobility space because of lesser operating cost for their electric vehicles, their market share is going to increase exponentially.
Additionally Meru’s other subsidiaries such as Meru Mobility Tech Pvt Ltd, V-Link Automotive Services Pvt Ltd and V-Link Fleet Solutions Pvt Ltd — would automatically, transform into Mahindra & Mahindra subsidiaries as well. As per the filing, the transaction will be through cash considerations.
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Both Meru and Mahindra are trusted brands and combined goodwill in the market should act as a catalyst in their growth journey.
Other shared mobility services such as Ola and Uber are exploring a strong food hold and strong presence over the market by capturing into Meru’s customers. With this new strategic investment, Meru would have access and availability of new funds to give tough fight to the competitors, on the contrary this will be the entry of Mahindra & Mahindra in the shared mobility services.