Auto major Mahindra & Mahindra on Monday said it has entered into an agreement to acquire a majority stake in beleaguered South Korean vehicle maker SsangYong Motor Company.
In a filing to the Bombay Stock Exchange, Mahindra & Mahindra said that it has "signed a memorandum of understanding with SsangYong Motor to acquire a majority stake in the South Korean SUV maker."
The agreement will be followed by a detailed due diligence process and finalisation of definitive agreements, the filing added.
"We are committed to leveraging SsangYong's strong competencies in R&D and technology by investing in a new SYMC product portfolio which will help us gain momentum in global markets," M&M Automotive and Farm Sector President Pawan Goenka said.
He further said, "India is a rapidly growing SUV market and will create new growth avenues for SsangYong. The synergies between both the brands, which share a similar heritage will make us a combine force to reckon with in the global utility vehicle space."
Rothschild and Samsung Securities are advising M&M on the deal. On August 12, M&M was chosen as the preferred bidder by SsangYong Motor.
The company had said that deal is likely to be finalised by November this year but did not disclose the financials involved. SsangYong Motor, which has SUV models like 'Rexton', 'Kyron' and 'Actyon' and sedan 'Chairman', has been undergoing a court-led restructuring from 2009 after suffering heavily due to the downturn in auto industry.
China's SAIC Motor Corp owns 10 per cent in the troubled automaker and about 70 per cent is held by creditors, led by state-owned Korea Development Bank.
SsangYong currently has two manufacturing facilities in South Korea and has an employee strength of 4,800 people.
It has 138 dealers in its home country, while 1,300 dealers are located across 98 nations. It sold 35,000 units in 2009.
M&M had said once the deal is done, it would consider bringing the premium SUVs from SsangYong Motor's stable into India.
Image: Mahindra Xylo