According to the Korea Economic Daily newspaper, Mahindra 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.
Contacted by the press, SsangYong officials were unavailable for comment, while M&M officials declined to make any statements. SsangYong Motor Company manufactures 4X4 sports utility vehicles and recreational vehicles. Mercedes-Benz AG had earlier made a capital investment in the company and was a long-time engine-supplier for the Korean brand.
The current owner of SsangYong, Shanghai Automotive Industry Corp (SAIC), paid $500 million in 2004 to acquire nearly 49 percent of the Korean company. SAIC is also part-owner of GM’s India operations. An interesting fact is that Mahindra wanted to buy a controlling stake in SsangYong in 2003, when its holding company, Daewoo went bankrupt and creditors put on sale a stake of 54 percent of the company. However, Mahindra pulled out of the race as it believed that SsangYong didn’t fit into its plans for international expansion.
Earlier this 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 and the local media in Korea had reported that a foreign firm had submitted a letter of intent to buy a stake in SsangYong, without mentioning the name of the bidder.
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