Ssangyong Motor Co., South Korea's smallest automaker, said Thursday India's top utility vehicle maker Mahindra & Mahindra Ltd. has been chosen as the preferred bidder for its majority stake.
Ssangyong and the local manager for the envisioned sale plan to sign a memorandum of understanding with the Indian company by the end of the month before due diligence begins in September, Ssangyong said in a press release.
The sides will finalize conditions for the takeover, including the amount of the purchase for the Indian company, in October and seek to ink a sales contract in November, it said.
Six bidders, including an alliance of French automaker Renault SA and Japan's Nissan Motor Co., previously submitted preliminary bids for the troubled carmaker. But only three, including India's tiremaker Ruia Group and Young An Hat co., a local headgear company that also owns bus maker Daewoo Bus Co., remained in the race after Ssangyong concluded receiving binding offers Tuesday."The choice was made after studying their bid prices, plans for capital increase and funding capabilities as well as their ability and willingness to directly manage and develop the company," Ssangyong said in a released statement.
The dropout of the Renault-Nissan alliance apparently was a disappointment to Ssangyong, as well as local investors, as the alliance was the only bidder with intensive experience and a network of auto sales. Shares of Ssangyong Motor slipped to as low as 11,550 won, down 10.81 percent from Wednesday's close on the Seoul bourse. They were trading 4.25 percent lower at 12,400 won as of 9:27 a.m.
The company has been under court protection since February 2009, shortly after its former Chinese parent, Shanghai Automotive Industry Corp., abandoned it in the wake of an unfolding global financial crisis.
It has since struggled to stay afloat though its production nearly halted last year due to a violent strike and occupation of its plants by workers that lasted nearly 100 days.The automaker has seen some positive improvements in recent months, selling more than 7,000 vehicles for the fourth consecutive month in July. It also introduced new and lighter versions of its sports utility vehicle, the Rexton, and its luxury sedan Chairman earlier this week.
Source: Yonhap news