M&M sings MoU with Ssangyong for takeover

M&M sings MoU with Ssangyong for takeoverIndian Auto major, Mahindra & Mahindra (M&M) has singed an memorandum of understanding (MoU) to acquire a majority stake in South Korean auto manufacturer Ssangyong Motor Company (SYMC) after it was selected as the preferred bidder for the troubled company.

M&M will now undertake a detailed due diligence process and will prepare final agreement for the acquisition. Ssangyong has said that it has given M&M the exclusive right for negotiations and will not involve any third party for acquisition proceedings.

M&M offcials signed the agreement at Seoul in South Korea and the Indian company has moved a step closer to acquire the small manufacturer of affordable yet proven SUVs such as 'Rexton', 'Kyron' and 'Actyon'. It also sells models globally and produce sedans.

Ssangyong is in bankruptcy protection after receiving court protection from creditors in February 2009. SYMC has a market share of 14 per cent in the SUV segment in the Korea market and a strong R&D base. The shares of Ssangyong closed 6.9 per cent higher.

M&M Vice-Chairman Anand Mahindra, while speaking at the press conference in Seoul said that M&M is financially able to acquire Ssangyong in order to expand its presence in the global SUV market. M&M aims to close the deal by November this year.

Both the companies have not disclosed the financial details of the deal but it is expected to the second largest international deal for an Indian company in the Auto sector after Tata Motors acquired Jaguar and Land Rover from Ford Motor Company for $2.3 billion.

“M&M is committed to nurturing the SYMC brand in global markets, while preserving its Korean heritage. It is intended that SYMC will continue to function as an independent entity with Korean management. The acquisition will offer financial stability to SYMC, while making M&M the largest Indian employer in Korea,” said M&M in a press release.