According to a Mahindra statement, both businesses will become wholly owned subsidiaries of the company which will continue to sell MNEPL and MNAL products.
“While the Indian market has not expanded as we had originally expected and industry challenges there continue in the near term, we still see promise in India going forward,” said Troy Clarke, Navistar president and chief operating officer.
“Given Navistar’s 2013 priorities, our capital and focus needs to be allocated to other business opportunities in the near term,” he added.
The agreement allows Navistar to continue sourcing components from India, while Mahindra would continue to provide engineering services to Navistar.
(Click Here, to read about a $880 million Navistar contract to upgrade MRAP vehicles.)
The sale requires regulatory approval in India and is subject to the conclusion of definitive agreements. The transaction is expected to be completed in early 2013.
According to the release, the sale is a result of Navistar’s analysis of its businesses and programs as part of its “Drive to Deliver” turnaround plan intended to identify areas for improvement.
Navistar and Mahindra jointly created MNAL in late 2005 to manufacture trucks and buses in India. MNEPL was formed two years later.