M&M likely to put in a bid of $480-mn for Ssangyong

As a step towards establishing itself as a global SUV company, Mahindra & Mahindra is likely to put in a bid of about  $480 million for the acquisition of Ssangyong Motor Co, the South Korean SUV maker, suggests industry sources. In the company’s board meeting held on Saturday the final decision for participating in the bid for Ssangyong was taken. Other auto biggies interested in the bid include Renault-Nissan alliance, South Korea’s Renault Samsung and Kolkata-based Pawan Ruia. August 10, 2010 was declared as the closing date for submission of the bid by Ssangyon.

The broad outlines of the proposed bid says that M&M will offer to pay $150 million for buying fresh shares, representing a majority stake in Ssangyong. The company will feature around $330 million to clear debts of the struggling foreign company, said one of the sources. It has not yet been clear that whether M&M will acquire Ssangyong with a debt of $330 million or will it spend this amount to retire the Korean company’s debt.

It is expected that M&M will fund this acquisition with a combination of debt and internal accruals. Vaishali Jajoo, research analyst at Angel Broking said that M&M has shown interest in Ssangyong because it wants to be a global SUV manufacturer. Ssangyong has a good brand portfolio. So, it could be a positive decision for M&M to bid for Ssangyong.