Mahindra and Mahindra to acquire 100% stake in Meru

Mahindra and Mahindra (M&M) has announced that it will acquire ridesharing company Meru Travel Solutions by buying out existing shareholders, including private equity investor True North, and promoters shares from Neeraj Gupta and Farhat Gupta.  

The company, which will own 100% of Meru post deal, will pay nearly Rs 97.66 crore ($13.15 million) as part of the buyout, a statement said. 

A unit of the Mahindra Group, M&M had acquired a controlling stake in Meru in 2019 for a cash consideration of Rs 103.5 crore. It currently holds 43.20% in Meru.  

The proposed buyout includes the acquisition of 44.14% shares from private equity player True North and others for not more than Rs 76.03 crore, and 12.66% shares from Neeraj Gupta and Farhat Gupta for close to Rs 21.63 crore. 

Other investors in Meru include the brand capital arm of Bennett Coleman and Company (BCCL).  

The mobility company has raised close to Rs 790.85 crore ($106.5 million according to current exchange rates) across multiple funding rounds, as per data from VCCEdge. 

Additionally, former president automotive at M&M, Pravin Shah, was set to take over as CEO of Meru and its subsidiary companies, Meru Mobility Tech, V-Link Automotive Services and V-Link Fleet Solutions, effective May 1, 2021, the statement said. Founder and CEO of Meru Neeraj Gupta will continue as an employee till June 30.

“The time is right for me to pursue newer interests and handover Meru in the safe hands of the Mahindra Group, one of the finest corporate houses in the country. Under the able leadership of (Mahindra group CEO) Dr. Anish Shah, I am confident that Meru will rise to greater heights in the times to come,” Gupta said in the statement.  

Headquartered in Mumbai, Gupta founded Meru in 2006 as a dial-in service. With the entry of app-based on-demand cab aggregators Uber and Ola, Meru has struggled for a share of the market. In 2018, Meru filed a complaint with the Competition Commission of India (CCI) for alleged predatory pricing and anti-competition agreements by Uber and Ola, which was later dismissed. 

“Our association with Meru is built on our compelling strategy to scale our shared mobility businesses. Pravin has agreed to take this critical responsibility of the business and to develop sustainable and scalable business strategies,” Mahindra Group CEO Shah, also its managing director, said.