Mahindra & Mahindra on Tuesday said it has signed a definitive agreement with Ssangyong Motor Company Limited (SYMC) to acquire 70 per cent stake in the ailing South Korean auto maker at a total cost of USD 463 million (about Rs 2105 crore).
The company said in a statement that it expected the deal to be concluded by March 2011.
Mahindra will acquire 70 per cent stake in Ssangyong and out of the total cost of acquisition of USD 463 million, USD 378 million will be in in new stocks and USD 85 million in corporate bonds, it added.
"The coming together of Mahindra and Ssangyong will result in a competitive global UV player. Together with its financial capability, Mahindra offers competence in sourcing and marketing strategy while Ssangyong has strong capabilities in technology," M&M President, Automotive & Farm Equipment Sectors, Pawan Goenka said.
He said there was also an opportunity to introduce a premium portfolio of SUVs in the Indian market, providing a new growth avenue for Ssangyong and "further strengthen our dominant position in the UV segment".
Commenting on the deal, Receiver of SYMC Yooil Lee said: "The securing of a solid partner who has both financial capability and is engaged in diverse markets will allow Ssangyong to emerge as a global SUV player through the strengthening of R&D, investments in product development, better business competitiveness and global sales expansion."
M&M said it has also signed a tripartite agreement the labour union of SYMC and SYMC, which contains provisions for employment protection, long-term investment and commitment for no labor dispute.
It said that it has already deposited 10 per cent of the final purchasing price per terms of the definitive agreement, with the remaining balance to be deposited three days prior to SYMC's stakeholder meeting.
SYMC will update its corporate rehabilitation plan to include reference to repaying liabilities with cash-in from the deal, and will be required to receive approval from creditors and the court on the updated plan.
After completing all the acquisition procedures and the repayment of rehabilitation claims, the corporate rehabilitation process is likely to be finished by March, 2011, the statement added.
The creditors are expected to approve the revised corporate rehabilitation plan by January 2011, it added.
Ssangyong Motors is a premier manufacturer of sports utility vehicles (SUV) and recreational vehicles (RV), with models such as Musso and Korando C, which was launched in export markets in October 2010.