Mahindra May Complete Acquiring Ssangyong Controlling Stake in Early 2011
Mahindra & Mahindra Ltd.’s planned acquisition of a controlling stake in Ssangyong Motor Co. may be completed in February or March, boosting the Indian automaker’s drive to expand sales outside its home market.
India’s largest maker of sport-utility vehicles hopes to complete the acquisition within that timeframe if it signs the final agreement with the Pyeongtaek, South Korea-based carmaker by the end of this year, Anand Mahindra, vice chairman of the Mahindra & Mahindra, said at a forum in Seoul today. The company, based in Mumbai, completed due diligence, he said, without elaborating.
Mahindra & Mahindra was named the preferred bidder for the bankruptcy-protected Ssangyong Motor Co. in August. The maker of Scorpio SUVs is seeking to benefit from the South Korean automaker’s technology and international sales network.
“We believe that when the global presence of Mahindra and Ssangyong is combined, jointly we will be able to achieve more success in the global market,” Mahindra said.
After reaching agreement with Mahindra, the two automakers must seek approval from the creditors and court supervising the bankruptcy, Ssangyong said.
Ssangyong rose 0.4 percent to close at 9,120 won in Seoul trading, giving it a market capitalization of 333 billion won ($297 million).
The acquirer will be the largest shareholder in Ssangyong after purchasing new shares, sale arrangers Samjong KPMG Advisory Inc. and Macquarie Group Ltd. said in a public notice in May.
Ssangyong, formerly controlled by China’s SAIC Motor Corp., sought bankruptcy protection in February 2009 after higher oil prices and the global recession squeezed sales of its mainstay SUVs, resulting in a cash shortage.
The company sold 57,330 vehicles including 34,668 exports in the first nine months of this year, compared with 20,591 total sales a year earlier, Ssangyong said in a regulatory filing on Oct. 1.
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