Automobile major Mahindra and Mahindra (M&M) on Monday formally signed a memorandum of understanding (MoU) with Ssangyong Motor of South Korea to acquire a majority stake in the company known for its sport utility vehicles. The deal is expected to catapult M&M into the global big league of utility vehicle manufacturers.
The deal is expected to be closed by November and Ssangyong will continue to function as an independent entity with Korean management.
"M&M today signed an MoU with Ssangyong Motor Company (SYMC) to acquire a majority stake in the South Korean SUV maker," said M&M in a statement issued to the Bombay Stock Exchange.
The deal that will also cover Ssangyong's debt of around $640 million (R3,000 crore) is expected to benefit M&M by way of technology and distribution network across several geographies, including Europe and America.
"Ssangyong brings with it a rich legacy of R&D and innovation," said Anand Mahindra, vice chairman and managing director of the Mahindra Group. "The synergies between both brands will make us a global force to reckon with in the global utility vehicle space."
The share price of Ssangyong rose by 6.9 per cent on Monday while that of M&M rose by 2.7 per cent during the day before closing at R624 with a gain of 1 per cent.