Mahindra & Mahindra (M&M) is likely to bid around $480 million for the acquisition of Ssangyong Motors, people familiar with the development said. The M&M board has decided to proceed with the bidding for the Korean company, which has also attracted interest from the Renault-Nissan alliance, South Korea’s Renault Samsung and Kolkata-based Pawan Ruia.
India’s largest utility vehicle maker will offer to pay $150 million to buy fresh shares, representing a majority stake, in Ssangyong while it will spend around $330 million to clear parts of debts of the company.
It is unclear yet whether M&M will acquire Ssangyong with a debt of $330 million or it will spend this amount to clear the Korean company’s debt. M&M will decide later on this as it will depend on the financial restructuring of the company. Ssangyong has been under court-led bankruptcy protection since early 2009 after suffering a severe shortage of cash.
Mahindra is expected to fund this acquisition through a combination of debt and internal accruals. The company has cash reserves of about Rs 5,000 crore.
“M&M has shown interest in Ssangyong because it wants to be a global SUV manufacturer. I think Ssangyong has a good brand portfolio. So, it could be a positive decision for the company to bid for Ssangyong,” said Vaishali Jajoo, research analyst at Angel Broking.