M&M to acquire 70 per cent stake in Ssangyong for Rs 2,105 crore

Mahindra & Mahindra, India said that, the company has signed a partnership agreement with the South Korean Ssangyong Motor Company Limited (SYMC). The India auto mobile major will take over 70 per cent stake of the debt ridden Korean auto maker for a cost of USD 463 million (almost Rs 2,105 crore).

The Indian auto major said, in a statement released, that the deal is expected to be closed by March 2011. As per the data, Mahindra will take over 70 per cent of the stake in the South Korean Ssangyong motors for USD 463 million. In the total cost, USD 378 million is expected to be in new stock and corporate bonds will account to USD 85 million.

Pawan Goenka, the M&M President for Automotive & Farm Equipment Sectors, said that Ssangyong and Mahindra deal will emerge as global utility vehicle auto maker. The Indian auto giant has the marketing, financial and sourcing capability and on the other hand Ssangyong competence lies in the technology of the machine. He later added that avenues for various oppurtunity will be opened and the Indian company is planning to introduce SUVs of the premium category in the domestic auto market. This will help the Korean auto makers which will get new growth prosopects.

Yooil Lee, the Receiver of the SYMC, said that, Mahindra India is a stronger firm in terms of both financial stability and in global market share, it will support the Ssangyong Motors to raise its share in the global auto sector and experience a hike in sales graph and gain competitiveness in the auto sector all by strengthening the R&D, investing in the product development.

As per the statement released it also says that, M&M in the agreement has also signed on tripartite agreement which is SYMC labour union. It includes job protection, long term investment and also has commitment for no labor dispute.

As per the agreement, the company has at present deposited 10 per cent of the purchasing price which is per term of the final agreement. The remaining amount should be given three days before SYMC's stakeholders meeting. It also says that, the process for corporate rehabilitation process is expected to be over by 2011 March after the procedures for taking over and repaying of the rehabilitation claims are finished. As SYMC needs to update the company's rehabilitation process which will include paying back the liabilities and seeking approval for the upgrading plan from the creditors and court.

As per the Korean company, the creditors will approve the plan by 2011 January. Ssangyong, are the producers of SUVs and RVs recreational vehicle, with cars such as Korando C and Musso, it was unveiled in October 2010 for the exports.

The Mahindra India has range of SUVs in the Indian Auto market, which has been ruling the SUV segment. They are Mahindra Bolero, Mahindra Scorpio, Mahindra Scorpio W and Mahindra Xylo.

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