In this episode of What's Buzzing, CNBC-TV18’s Sonia Shenoy explains why Mahindra and Mahindra (M&M) is up 5 percent in trade on Wednesday.
According to report in Korean Times, SsangYong which is owned by M&M is close to now signing an agreement with the US-based vehicle distributor HAAH Auto Holdings. HAAH is partially owned by the Chinese company Chery and Chery has been aggressively seeking auto assets.
If this agreement goes through, Chery will become a stakeholder in SsangYong. Currently, M&M is the largest shareholder in SsangYong. However, M&M has indicated its plans to cut its shareholding in South Korean company to below 50 percent from 75 percent earlier.
Also, the company took a strategic call to not pump any more money into the loss making SsangYong as part of its tighter capital allocation policy. If SsangYong moves out of M&M’s fold, then it will be a big positive for M&M as the company won’t have to bear the losses. So just the possibility of the company selling off SsangYong is something that is driving the stock higher.
To watch other videos in this series, click the What’s Buzzing tab below.