SsangYong to come debt free to M&M
12 August 2010
Mahindra & Mahindra (M&M), India's largest utility vehicle maker,which has been named as the preferred bidder for South Korea's debt-ridden SsangYong Motor, will be acquiring the Korean company debt free if the deal goes through.
According to the bid structure, M&M's bid money will be used to pay-off SsangYong's debts so that M&M will get the Korean car maker debt free.
In a filing with the stock exchange today, Seoul-based SsangYong said that it will sign a memorandum of understanding with the M&M and allow the Indian car maker to conduct due diligence in September with an aim to conclude the deal by November.
Without revealing M&M's bid price, SsangYong said it would ask M&M to deposit five per cent of its bid price by the end of the month..(See: Ssangyong names M&M as preferred bidder)
Mumbai-based M&M hopes that the acquisition of SsangYong will give it the needed technology to add to its range of SUVs as well as an entry into markets in Russia and the Far East, where Ssangyong has a strong presence.
''Korea is one of the world's leading centres of automotive excellence and Ssangyong brings with it a rich legacy of R&D and innovation," said Anand Mahindra, vice chairman and managing director, Mahindra Group. "Mahindra and Ssangyong will create synergy, which will make us significant global players.''
M&M is reported to have made a bid around $400 million for Ssangyong, which has a market capitalisation of around $350 million as of yesterday and debts of about 740 billion won ($637.9 million).