Unnamed sources have told Bloomberg that the two companies have been in discussions about a possible takeover for several weeks. These reportedly well-placed sources claim Mahindra is close to tying up a deal, but it's possible that the discussions could still fall through.
After news broke about a possible takeover, Pininfarina's share price jumped 35 percent to 5.40 euros ($7.54) a piece. The price has since settled to 4.86 euros ($6.79), giving the company a market value of 146.5 million euros ($204.6 million).
Founded in 1930 by Battista "Pinin" Farina, Pininfarina is well known amongst automotive enthusiasts for its long standing relationship with Ferrari, with the Italian design house involved with almost every Ferrari road car made to date.
Outside of this partnership, Pininfarina has also designed and engineered vehicles for automakers from all around the world, with examples stretching from concept cars, such as the Honda Argento Vivo and Chery M14, through to production vehicles, such as the Alfa Romeo 164 and Rolls-Royce Carmargue.
Until three years ago, the company also operated a number of factories that produced under vehicles contract for many major car makers. Models that have trundled out of Pininfarina's factories include the Peugeot 406 coupe, second-generation Volvo C70, Cadillac Allante and Ford Streetka.
Partially due to the struggles at its manufacturing arm, Pininfarina has posted losses for 10 of the past 11 years.
Established in 1945, Mahindra is best known locally for its utes and SUVs. In addition to its range of SUVs and small cars, the Indian company also manufactures motorcycles, tractors and military vehicles.
In 2011, the company rescued South Korean manufacturer Ssangyong from bankruptcy after former owner, China's SAIC, was charged with illegally transferring technology with the Korean government to China. Mahindra also owns a majority share in Peugeot Motorcycles.
According to Bloomberg, Mahindra has around 82.6 billion rupees ($1.69 billion) of cash on hand.