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Mahindra plans to buy Navistar stake in ventures

LISLE, Ill. (AP) -- The Indian truck maker Mahindra & Mahindra Ltd. plans to buy Navistar's stake in two joint ventures for approximately $33 million as the U.S. company refocuses its capital and sheds underperforming divisions.

The deal includes Navistar Group's stake in Mahindra Navistar Automotives Ltd. and Mahindra Navistar Engines Pvt Ltd. Both companies would become subsidiaries of Mahindra & Mahindra. The joint venture on Mahindra Navistar Automotives began in 2005, while the Mahindra Navistar Engines joint venture started in 2007.

Navistar, a heavy truck and engine company, said that it needs to redirect its attention to Mahindra Navistar Automotives and Mahindra Navistar Engines and focus more intensely on areas that more quickly contribute to its goal to improve its return on invested capital.

In September Navistar outlined a cost-cutting plan and said that it was reviewing its noncore businesses.

Mahindra & Mahindra said Tuesday that it would take complete ownership of Mahindra Navistar Automotives and Mahindra Navistar Engines and continue to sell their products.

The deal will allow Navistar International Corp., based in Lisle, Ill., to continue sourcing components from India. Mahindra would continue to give its engineering services to Navistar. Navistar would also continue to support Mahindra & Mahindra through a licensing agreement and provide support as needed to Mahindra Navistar Automotives and Mahindra Navistar Engines.

The transaction, expected to be completed early next year, needs regulatory approval in India.