Petrol Stop - M&M wins race for Ssangyong

M&M wins race for Ssangyong

Thursday, 12 August 2010

13 August 2010;timesofindia.indiatimes.com:MUMBAI: Mahindra & Mahindra (M&M) finally tasted success in a strategic international acquisition as it emerged as the preferred bidder for a controlling stake in cash-strapped Korean SUV maker Ssangyong. The deal will provide the Indian utility vehicle major access to technology and new markets. The company, that had lost out of the race for Jaguar and Land Rover to fellow Indian company Tata Motors in 2008, emerged winner in a three-company race for the loss-making Ssangyong, which exports vehicles to Asia-Pacific, Europe, Africa, the Middle-East and South America. While the development was confirmed by both M&M and Ssangyong, the companies refused to divulge details on the price offered by M&M. " Korea is one of the world's leading centres of automotive excellence and Ssangyong brings with it a rich legacy of R&D and innovation. Mahindra and Ssangyong will create synergy, which will make us significant global players," Mahindra group vice-chairman and managing directorAnand Mahindra said. "This acquisition will provide us with a great opportunity to accelerate our progress as a global player in SUVs". Ssangyong Motor, Korea's smallest car maker by sales with a 2% share, suffered a severe cash shortage due to a slump in sales of fuel-guzzling SUVs, before being placed in court-led bankruptcy protection in early 2009. The company sold 43,811 vehicles in the first seven months of 2010, a 235.2% jump from a year ago. For the first quarter, it reported that its net loss narrowed by more than 90% from a year earlier and shares in the company ended up 0.3% on Tuesday, outperforming Korean stock market's 0.5% fall. Ssangyong had $640 million in long-term debt as of December, M&M Group CFOBharat Doshi said. "The borrowings will be repaid with the money Mahindra is paying to acquire the stake," Pawan Goenka, president of M&M's automotive division said. "When the company is handed over to us, all existing long-term debt will be cleared.