Maruti Suzuki India on Tuesday said its board has approved a proposal to execute a share purchase agreement to acquire 100 per cent equity capital of Suzuki Motor Gujarat (SMG) from Suzuki Motor Corporation of Japan.

Maruti Suzuki will issue its shares on a preferential basis to SMC sewing up the deal by stock rather than cash.

The company will acquire 12,84,11,07,500 equity shares for a total purchase consideration of Rs 12,841.1 crore.

Maruti will issue 1,23,22,514 shares of the company to SMC for Rs 10,420.85 per equity share.

This is the first time that Maruti has disclosed a value for the Gujarat plant. It first said it would buy the plant in July.

The deal is subject to shareholders’ approval. The automaker will come out with its second-quarter financial results on October 27.

The deal will increase Suzuki Motor Corp.’s effective holding in Maruti Suzuki by 1.7 per cent to 58.19 per cent.

Voting for shareholder approval begins on Wednesday and will go on for a month.

In August, the company’s board approved the issuance of shares on a preferential basis to SMC as consideration for the acquisition of a 100 per cent stake in SMG. Post the acquisition, SMG would become a wholly-owned subsidiary of MSI.

The board of Maruti Suzuki India (MSI), in its meeting on July 31, 2023, had approved the termination of the contract manufacturing agreement with SMG and acquiring its shares at a price to be determined by all applicable laws and regulations.

MSI announced that it will acquire the Gujarat-based production facility of its parent firm SMC to reduce complexity and bring all manufacturing-related activities in the country under one entity.

“With the growth of the Indian car market and export potential, the company would need to increase its production capacity to about 4 million cars per annum by 2030-31, almost double from current levels,” the company said.

A fully-owned subsidiary of SMC, SMG supplies its entire production exclusively to Maruti Suzuki India.

The turnover of SMG in the last financial year ended on March 31, 2023, was Rs 31,852.5 crore

SMG, which was incorporated in 2014, has a production facility in Gujarat with an installed capacity of 7.5 lakh units per annum.

The company’s first EV offering – a sport utility vehicle (SUV) – will be manufactured in the Gujarat plant. It plans to have six EV models by 2030, each of which will be produced at the plant, according to Reuters.

MSI shares ended 0.02 per cent down at Rs 10,706.15 apiece on the BSE.