Creditors of South Korea’s SsangYong Motor on Friday picked China’s Shanghai Automotive Industry Corp. as preferred bidder to buy a $US360 million majority stake in the sports utility vehicle maker, according to Reuters.

Ssangyong has been up for sale since creditors took control of the debt-ridden Korean auto maker in 1999, when its parent Daewoo Group failed under a mountain of debt, the report noted.

Reuters said Shanghai Auto (SAIC) is General Motors‘ main Chinese partner – in 2002, GM, Shanghai Auto and Japan’s Suzuki bought control of South Korea’s Daewoo Motors.

State-owned SAIC also has a large joint venture with Volkswagen and is currently considering listing its entire business, possibly overseas, the news agency added.

An official at Ssangyong’s main creditor, Chohung Bank, told Reuters that Shanghai Automotive was named the preferred negotiating partner to buy a 48.9% stake in Ssangyong, worth 417.8 billion won ($US359.4 million) based on Thursday’s closing share price.

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Analysts reportedly viewed the choice as a win-win.

“For Ssangyong, the deal could help it establish a much-needed bridgehead for sales in China,” Song Sang-hoon, auto analyst at Hyundai Securities, told the news agency, adding: “And Shanghai could make a foray into the lucrative SUV segment with the help of Ssangyong’s advanced technology.”

Creditors would sign a binding pact with the Chinese auto maker on Tuesday, Chohung Bank told Reuters.

The news agency said Ssangyong stock remained under pressure due to an ongoing partial strike by the SUV specialist’s 5,600-member union, which began industrial action on July 12 to push for higher wages and job security.

“We will ask for tripartite negotiations involving creditors, the buyer and the union,” a union spokesman told Reuters, adding: “We are also preparing detailed union demands for the sale.”

“Shanghai Automotive had the highest score on prices, other takeover terms, and post-acquisition development plans based on a close study of takeover proposals from several candidates,” Chohung Bank said in a statement cited by the news agency.

“Creditors held talks with Shanghai Automotive on takeover terms before signing a memorandum of understanding and both sides agreed on July 22 on MOU terms,” the statement reportedly said.

A US pension fund had the second highest score and would be granted a chance to negotiate in case talks with Shanghai Automotive fell through, Chohung told Reuters.

“Talks are still continuing. We’re waiting for the final word from the Koreans,” an SAIC spokeswoman told the news agency, declining to give further details.

A deal to sell the troubled auto maker to Chinese state chemicals firm Blue Star collapsed in March over price differences, Reuters noted.