Shares of Swaraj Engines surged on September 21 after Mahindra & Mahindra (M&M) agreed to buy a 17.41% stake in the company from Kirloskar Industries for Rs 296 crore.

The acquisition will increase M&M’s stake in Swaraj Engines from 34.72% to 52.13% and make it a majority shareholder. The company proposed to acquire 21,14,349 shares at Rs 1,400 per share. Shares of Swaraj Engines rose about 13% to Rs 1,919. Kirloskar Industries rose more than 6% to Rs 1,735.

According to the filing, after the acquisition, Swaraj Engines, a current M&M associate, will become a subsidiary of the company.

Swaraj Engines is engaged in manufacturing diesel engines and their components and is a major supplier to the M&M tractor division. It was popularised in 1985 by the former Punjab Tractor Company and Kirloskar Oil Engines (now Kirloskar Industries), which later merged with M&M.

Swaraj Engines’ total operating income for the year ended March was Rs 1,138.15 crore. M&M shares rose 1.36% to Rs 1,321.