Mumbai-based utility vehicle and tractor maker Mahindra & Mahindra (M&M) is interested in buying stakes in beleaguered South Korean sports utility vehicle manufacturer SsangYong Motor Company (SMC).
According to the Korea Economic Daily, M&M recently sent a letter to the management of SsangYong, expressing its desire of buying controlling rights in the cash-strapped firm. The paper did not cite the source of the news.
While SsangYong officials were unavailable for comment, M&M officials declined to do so. M&M’s stock today closed 1.5 per cent higher on the Bombay Stock Exchange, at Rs 528.40.
SsangYong Motor Company manufactures 4X4 sports utility vehicles and recreational vehicles. Mercedes-Benz AG had earlier made a capital investment in the company.
China’s largest automaker, Shanghai Automotive Industry Corp (SAIC), which paid $500 million in 2004 to acquire nearly 49 per cent in the debt-laden SMC, is the current promoter of the company. SAIC is part-owner of General Motors’ India operations.
Interestingly, M&M was in the race to buy a controlling stake in SsangYong in 2003 when its holding company, Daewoo, went bust and creditors put up a 54 per cent stake in the Korean company for sale.
M&M, however, later pulled out of the race as it believed that SMC failed to fit into its plans for the international market.
M&M was also planning to bring in SsangYong’s seven-seater SUV Rexton to the Indian market, which would have sold alongside the Scorpio, the M&M flagship passenger vehicle. However, M&M later changed its plans.
Earlier in the month, SsangYong Motor’s spokesperson stated the company would soon issue an official stake sale announcement, for which it had already sent out introductory letters. A number of foreign companies had expressed interest.
The local media in Korea had reported that a foreign firm had submitted a letter of intent to buy a stake in SsangYong. The Korean company was supposed to be working on it.