Maruti Suzuki is planning to issue preferential shares, instead of cash, to its parent firm Suzuki Motor Corporation to acquire a 100 per cent stake in Suzuki Motor Gujarat.
The issue will be taken up at the company’s Board of Directors meeting, scheduled on October 17, India’s leading car maker said in a stock exchange filing on Thursday.
The decision saw the company’s share price going up in the morning session at BSE on Thursday.
Maruti Suzuki had informed the stock exchanges on July 31 that its board approved the termination of the contract manufacturing agreement with Suzuki Motor Gujarat Private Limited (SMG).
SMG entered into a contract manufacturing agreement to supply the entire production for sale to Maruti Suzuki. Maruti Suzuki now plans to end its contract manufacturing agreement by acquiring 100 per cent shares held by SMC.
The board had evaluated two available options for acquiring the SMC equity in SMG. While the first was payment in cash, the second one was the issue of MSIL equity shares on preferential allotment basis. It then settled for the latter option.