Mahindra Group and CIE Automotive have signed an agreement between the Indian company’s automotive component businesses – held under its Systech Sector – and the Spanish operation also involving its subsidiary Autometal.

The agreement will see the formation of a global automotive component supply network with combined annual sales of around US$3bn with business in North America, South America, Europe and Asia held through listed operations in Spain, Brazil and India. 

As part of the transaction CIE Automotive – through one of its subsidiaries – will acquire from Mahindra Group a stake in its listed and unlisted companies belonging to Systech Automotive Component business and CIE Automotive will contribute its forging businesses in Spain and Lithuania and together consolidate all companies under MFL which will be renamed Mahindra CIE.

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Mahindra CIE will continue to be listed on the Bombay Stock Exchange and the National Stock Exchange.

M&M will take a stake of 13.5% in CIE Automotive, which is listed in Spain, making it the second largest shareholder in CIE. M&M will nominate two directors to the CIE Board.

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CIE Automotive will take a majority stake in a single listed entity in India, which will continue to operate the current Systech automotive component businesses globally and include CIE’s European forgings operations.

“Eight years ago, we at Mahindra set out to build an Indian automotive supplier with a global footprint and this drove a series of acquisitions in India and Europe for us,” said Mahindra Group chairman, Anand Mahindra. “We have been listening closely to our customers, who have asked to step up our globalisation efforts and follow them around the world.

“This Grand Alliance with CIE enables us to rise above competition, quickly extends our reach into new geographies, and grow our collective product portfolio in the coming years.”

For his part, CIE Automotive chairman, Anton Pradera, noted: “CIE’s leadership and shareholders have a strategy to develop India as the gateway to the Asian market. We have been impressed by the promise of the Indian automotive market and the growing emergence of India as a key global production hub for small cars.

“In Mahindra, we found a partner that has a multi-technology portfolio similar to ours and shares the same business values. So while we are happy to see CIE gaining an entry to India, we are equally pleased to have M&M as one of CIE’s largest shareholders.”

CIE Automotive was not immediately available for comment.