Mahindra offered to buy the Italian design firm Pininfarina a few months ago but the offer has been turned down by a few creditors of the designing company.
A few months ago, we reported that Mahindra was looking to acquire the famous design house Pininfarina in order to have top notch designers on-board. We even mentioned that the deal would be difficult and would be executed only after the approval of Pininfarina’s holding firm Pincar and its various creditors. As expected, three of the creditor banks have disapproved of the deal since Mahindra wanted to write off half of the Italian firm’s debt which currently stands at $97 million (Rs. 615 crores) and this would have affected them.
Pininfarina has been suffering due to a large amount of debt and this has led them to get into designing other products like toothbrushes and vending machines. Not only this, they even started designing buildings. This year has been a bit better for the brand with their stock prices rising by a healthy 21%, lifting up the value of the company to Rs. 840 crores. After the news of Mahindra trying to acquire the brand came out, the sentiments have been positive leading to a further rise in stock prices. The firm has been posting losses since some time now and this has been bleeding the firm internally.
We believe that if the deal went through, it would have been beneficial for both the brands. The iconic design house would have got a new lease of life and the name could be heard for a much longer time. The way things are going on currently, sooner or later, Pininfarina will have to shut shop. Mahindra would have benefitted more from the deal considering it would have a great team of in-house designers for its cars in the future. Not only this, Mahindra Lifespaces, the real-estate arm of the carmaker could also benefit from the Italian firm’s expertise in building designing. Alas, none of this would happen now that the deal has been called off.