Mahindra to buy 51% stake in Peugeot Scooter business

Thu, 09 Oct 2014

PSA Peugeot-Citroën already lost a lot of control of its automotive business earlier this year when Dongfeng and the French government each bought 14 percent shares of the struggling firm to keep it alive. The company's scooter division, one of the oldest in the world, is now facing a similar situation as Indian motoring giant Mahindra has offered to buy a 51-percent share of it for better access to the two-wheel market.

Mahindra is willing to pay a total of 28 million euros ($35.5 million) – 15 million euros ($19 million) up front and another 13 million euros ($16.5 million) later – to acquire a majority stake in the company founded in 1898. According to The Financial Express, the deal isn't officially complete yet because it still has to go through the usual regulatory hoops, but Mahindra thinks all that could be complete in the next three months. The first rumblings of the possible purchase came just a few weeks ago.

According to The Financial Express, Peugeot's two-wheel division is Europe's second-largest scooter maker behind Italy's Piaggio, but the company isn't a moneymaker. "In a European market that has been in steep decline for several years, the partnership with M&M would enable Peugeot Scooters to diversify its business base and speed its international expansion," said the French corporation in a statement. The firm operates factories in France, China and Taiwan.

Mahindra is clear that its major plan for the European brand is to launch it in India. According to The Financial Express, Mahindra already sells scooters there, but it's a tiny part of the market. Grabbing a company with an established name and history might be just the thing to kickstart its fortunes.

By Chris Bruce