China’s Blue Star, a chemical company that also runs a string of noodle restaurants, on Wednesday said it had given up plans to buy control of South Korea’s Ssangyong Motor Co as it couldn’t agree a price.
Go deeper with GlobalData
According to Reuters, Blue Star’s failed attempt to buy a stake in the SUV maker opens the way for General Motors’ main Chinese partner, Shanghai Auto, to try again after creditors such as Chohung Bank snubbed the bid earlier.
The South Korean firm has a market value of $1 billion but is wallowing in 1.32 trillion won ($1.14 billion) of debt, the report noted.
Reuters said that creditors had picked Blue Star, which runs a chain of more than 400 noodle restaurants and has a car repair arm, ahead of fellow state-run firm Shanghai Automotive Industry Corp (SAIC), which operates several car-making ventures with GM across the country.
Analysts told the news agency Ssangyong was better off without Blue Star, which has no experience making cars.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalData“Blue Star wasn’t considered the best candidate for Ssangyong despite the creditor decision, because it lacked the expertise to grow a car maker like Ssangyong,” Chae Kyoung-sup, an analyst at Shinyoung Securities in Seoul, reportedly said.
Last week, Ssangyong’s creditors extended until the end of this month a deadline for Blue Star – which boasts annual sales of more than 10 billion yuan ($1.2 billion) – to pin down its offer, Reuters said.
The report noted that South Korean media had reported Blue Star was due to pay $600 million to $700 million for 50% of Ssangyong Motor, a stake currently valued at about $510 million.
“We’ve abandoned it,” Blue Star spokeswoman Li Aiqing told Reuters. “There were just too many problems that we were not able to overcome, including pricing,” she reportedly said, declining further comment.
“I’m sure Ssangyong would be much happier being taken over by Shanghai Auto. What does Blue Star know about making cars anyway?” analyst Lin Wenjun at Capital International Holdings in Shanghai told the news agency.
Chohung Bank reportedly said in a statement it would hold a meeting on Thursday to discuss plans for Ssangyong.
“I don’t know what will happen next. But we are the only Chinese company to have formal approval from Beijing,” SAIC spokesman Xue Hao told Reuters.
