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M&M to pay Rs 2,105 crore to acquire 70% in Ssangyong

24 Nov 2010 Evaluate

Ssangyong Motor Company Limited (SYMC) and India's Mahindra & Mahindra Ltd. (M&M) its preferred bidder, has yesterday announced the signing of a definitive agreement in Seoul resulting in a competitive global UV player. M&M has financial capability, competence in sourcing and marketing strategy while Ssangyong has strong capabilities in technology. M&M is committed to leverage the combined synergies by investing in a new Ssangyong product portfolio to gain momentum in global markets along with an opportunity to introduce premium portfolio of SUVs in the Indian market.

SYMC is undergoing a corporate rehabilitation process since February 2009 and the court receivership will conclude upon court approval and the termination of corporate rehabilitation process. Mahindra is committed to nurturing the ssangyong brand in global markets while preserving its Korean heritage. SYMC will continue to function as an independent entity with primarily a Korean management.

The total cost of acquisition is US$ 463 million (~2105 crore) with US$ 378 million in new stock and US$ 85 million in corporate bonds. Mahindra will acquire a 70% stake. The definitive agreement also encapsulates terms and conditions related to the process of acquiring new stock and corporate bonds, down payment and deposit guidelines, repayment of rehabilitation claims, employment guarantees, and other covenants. M&M has already deposited 10 percent of the final purchasing price per terms of the definitive agreement. M&M will be required to receive approval from creditors and the court on the updated corporate rehabilitation plan, which is likely to be finished by March, 2011.crackcrack

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