Mahindra & Mahindra announced its definitive exit from CIE Automotive through the placement, via an ABB led by BNP Paribas, of its 3.58% stake at an agreed price of €29.37 per share, representing a 6% discount.
Report by Renta 4
In a transaction similar to that which took place on 4 December, Mahindra & Mahindra announced on Wednesday its definitive exit from CIE Automotive (CIE) through the placement, via an ABB led by BNP Paribas, of its 3.58% stake. It should be noted that in a similar transaction, it had already placed a stake of the same size (3.58% of the share capital) on the markets on 4 December last year, marking a further step in its exit from CIE (it sold 7% in 2017) following a long and close collaboration, which continues at an operational level to this day.
The agreed price for the placement was €29.37 per share; this represents a 6% discount compared to yesterday’s closing price (€31.25 per share). This discount is even lower than that of the previous placement in December, which was carried out at €27.75 per share, with a 7.5% discount.
Assessment: Mahindra’s exit from CIE Automotive’s shareholding was a move anticipated by the market, given that it has taken place with the share price close to its all-time highs, and therefore without unduly damaging the company’s stock market valuation; furthermore, as it clears up the uncertainty surrounding this shareholder’s exit, we view the news positively.
Furthermore, both this transaction and the one last December should help boost liquidity in an attractive stock, which currently sees little trading relative to its market value.
Recommendation: Overweight, Target Price €35.8 per share
