Indian utility vehicle and tractor maker, Mahindra & Mahindra, is thinking about bidding for South Korean SUV specialist Ssangyong Motor, sources have said, in a deal reportedly worth up to US$500m.

Ssangyong, 10% owned by China’s SAIC Motor Corp, has been in court-led restructuring since early 2009 and is looking for a buyer to stay afloat with fresh capital, Reuters reported.

A Seoul court kicked off the sale process this week and set a 28 May deadline for a letter of intent.

A Ssangyong official told the news agency Mahindra was known to have informally expressed interest in the troubled carmaker even before the formal process started.

But a second source said the Indian firm had yet to take a decision on whether to submit a letter of intent and was still reviewing its potential proposal.

Mahindra, which has been looking for acquisitions since it lost out to Tata Motors to buy Jaguar Land Rover in 2008, has been looking for acquisitions to expand its portfolio and get access to new markets, declined to comment.

A deal with Ssangyong, which makes Rexton and Kyron SUVs and the Chairman sedan, would be a good fit for Mahindra, which plans to launch a pick-up truck in the United States and aims to introduce an SUV later this year.

Mahindra is the sole overseas bidder for Ssangyong, and media reports said two-to-three small South Korean manufacturers and investment firms were also interested.

An official involved in the sale process in Seoul told Reuters Mahindra had not directly contacted the sellers, and other potential bidders had yet to express interest.

South Korean media put the deal at $300m-$500m but analysts said Mahindra was more likely to bid in the range of $100m to $300mto recapitalise Ssangyong, which was forced to undergo a capital writedown last year.

“If you look at its debt-to-equity ratio, it is about 0.4 and an acquisition of this small size would hardly stretch its financials,” Prabhudas Lilladhe analyst Surjit Arora said.

Shares in Ssangyong, with a market value of KRW413.6bn ($365m), have halved in value since late last year on concerns about a further capital writedown.

But it has since seen some improvement in operation, helped by a consumption recovery and aggressive marketing.

Ssangyong narrowed operating losses to KRW25.8bn in the first quarter from a year earlier and this week forecast strong profit growth in the second quarter, helped by improving sales.

Its car sales more than doubled last month and it expects record sales in May.

SAIC, which bought into Ssangyong in 2004 to become a top shareholder, with a 51% stake, has not been able to turn around South Korea’s smallest automaker.

It has steadily sold down its stake in Ssangyong to 10% in recent months after a capital writedown last year.

Samjong KPMG and Macquarie are handling the sale, Reuters added.