M&M may have 70% stake in Ssangyong

Mahindra & Mahindra is all set to have a stake of up to 70% in the South Korean SUV maker Ssangyong Motor Company, said a source. The source also added that Mahindra and Mahindra’s $450-million bid is for much more than 51% and could be as high as 70%. 

On Thursday, M&M was named as the preferred bidder by the Ssangyong Motor Co. In two weeks, the company will sign a MoU with Ssnagyong for a detailed due diligence. Probably, the company will sign a definitive agreement in November or December. M&M has been assured of a $50-million debt write off by Ssangyong Motor, said the sources.

M&M officials have also announced that they would get a ‘debt free’ company and M&M expects Ssangyong to leverage its own ‘cleaned-up balance sheet’ for raising money for the future product development. At present, Ssangyong is in bankruptcy protection. The creditors own 70 per cent of the company.

A person acknowledged with this situation said that depending on the due diligence, Mahindra and Mahindra can increase or decrease its bid within the permissible range. After the selection of Mahindra and Mahindra as the preferred bidder, the company will first have to deposit 5% of the bid as guarantee money.

M&M is also planning to ride Ssangyong in the strong markets of Ssangyong as well as in the new global markets which will include the US. A company executive also said that they will check if Ssangyong has any US-worthy products which could also be launched in that market along with M&M’s own range of pick-up trucks.