Aug. 12: Mahindra & Mahindra (M&M), India’s leading utility vehicle maker, has emerged as the preferred bidder for Ssangyong, South Korean SUV manufacturer. As the preferred bidder, the company will sign a memorandum of understanding with the Korean company and start a detail-ed due diligence process. Post the acquisition, M&M will be bringing some of the high-end Korean SUVs into the Indian market. The company currently doesn’t have any vehicles in the high-end segment — where prices go beyond Rs 10 lakh. This is said to be the fastest growing segment of the SUV market.
This will be the second acquisition by M&M in the automotive space in the recent months. It had acquired Bengaluru based Reva, which makes electric cars, in May this year. This is a much larger transaction, but M&M hasn’t revealed the total cost of the acquisition at this point. Market speculation pegs the deal size at around $500 million. The money being paid by M&M will be used to settle the long term debts of Ssangyong, said executive director and Group CFO, Mr Bharat Doshi.
M&M will be getting the firm without any long term liabilities, he added. M&M should be running Ssangyong by December, said Mr Pawan Goenka, president of the company’s automotive business.
The past few years have been very turbulent for Ssangyong, which has seen falling sales, multiple changes in ownership and a crippling strike by the labour union. The Korean major is currently selling about 7,000 vehicles a month. Apart from its presence in the high end SUV segment, M&M will also get access to the 1,200 strong dealership network and the R&D unit of the Korean major. Apart from high end utility vehicles, Ssangyong also makes a luxury car. This would also be useful for M&M, which till recently was jointly manufacturing a sedan, Logan, with Renault. That JV is now off.