Mahindra wins Ssangyong
Auto maker Mahindra & Mahindra on Thursday announced that it was set to take control of South Korean bankrupt Ssangyong Motor Company by picking up a 51 per cent majority stake in the company, which can power up Mahindra’s global ambitions. HT reports.autos Updated: Aug 13, 2010 01:45 IST
Auto maker Mahindra & Mahindra (M&M) on Thursday announced that it was set to take control of South Korean bankrupt Ssangyong Motor Company (SYMC) by picking up a 51 per cent majority stake in the company, which can power up Mahindra’s global ambitions by giving a combination of technologies, facilities, models and a wide network of
How good? What it means for the Mahindras
New technologies both in petrol and diesel engines.
Seven vehicle models —
2 large-sized sedans, 4 SUVs and 1 multi purpose vehicle.
Chance to introduce premium SUVs in India — with a price tag of more than R11 lakh
Access to South Korea‘s automobile market — the third largest in Asia.
Ssangyong’s brand and presence in other developed markets including those in Europe and Russia.
1,200 dealers worldwide.
Financial details were not disclosed.
M&M said it had been chosen as the preferred bidder to acquire Ssangyong (pronounced Sanyo)and the deal was likely to be finalised by November.
"I think what this deal does for us is provide us with a tremendous opportunity to accelerate our progress towards our stated intention of becoming a globally recognised player in the specific niche of utility vehicles," Anand Mahindra, vice-chairman and managing director, M&M.
In Korean language, Ssangyong means "Double Dragon."
As per the preferred bidder status that would lead to control, M&M would require to enter into a memorandum of understanding, followed by a confirmatory due diligence process and signing of definitive agreements thereafter.
"Two weeks from now, we will sign the MoU and while the definitive agreement will be signed in November," said Pawan Goenka, president, automotive and farm sector, M&M.
M&M’s stock witnessed some interest from the market as it rose by 2.9 per cent during the day before it closed with a gain of 1 per cent at Rs 633 at the National Stock Exchange, amid market concerns over the aggressive bidding for a
Fine print that may hurt
SYMC remains a minor player in S Korea with a marketshare of just 2 per cent.
It carries huge debt in its balance sheet estimated at $640 million (R2,944 crore).
Shopping strong: Mahindras’ recent buys
July 2008: M&M buys assets of Kinetic Motors for R110 crore
April 2010: M&M buys out Renault stake in Mahindra Logan
May 2010: Buys 55 per cent in Bangalore-based electric car maker Reva for R45 crore
However, M&M will get a debt-free company. " Whatever bid amount we put in the company will be used to settle the existing long-term debt," Mahindra said.
Ssangyong had debt totalling around $640 million (Rs 2,944 crore) at the end of 2009.
While traders are subdued, analysts think M&M has made a smart move. "While M&M is getting an aging SUV platform, it will be a good addition to its specialisation in coming out with value for money products," said Aseem Dhru, CEO, HDFC Securities. "This is a relatively smaller deal and will not expose the company to much risk."
First Published: Aug 12, 2010 23:08 IST