Indian utility vehicle maker Mahindra and Mahindra has been chosen as the preferred bidder to take over South Korea’s bankrupt SUV specialist Ssangyong Motor.
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Ssangyong said it would sign a memorandum of understanding with the Indian carmaker by the end of this month ahead of the du
e diligence process which will start in September.
Mahindra emerged as the leading bidder after the Renault Nissan alliance dropped out, apparently because of the high costs involved. Other suitors included the Indian tyre maker Ruia Group and Young An Hat, a Korean headgear company that also owns Daewoo Bus.
Ssangyong said it would receive deposits worth 5% of the bidding price from Mahindra this month. The Indian company, which is looking to expand globally, is interested in Ssangyong’s SUV technology.
The Korean company manufactures the low-priced but robust Rexton, Kyron and Actyon SUVs.
Creditors have not said how much Mahindra has bid but analysts said the cost of over half of Ssangyong would be up to KRW500bn (US$418m). However, it may need almost half as much again in order to clear its debts.
Ssangyong was granted court protection from creditors in February 2009 after the global recession slowed demand and former Chinese parent Shanghai Automotive Industry Corp declined to pump in more funds.
Strikes have also disrupted production as the company has struggled to stay afloat but there has been some improvement this year. Ssangyong sold 43,881 vehicles, including 26,190 overseas, in the first seven months, compared to 13,091 in the same period a year ago.
