India’s Mahindra & Mahindra Ltd. (500520.BY) said Saturday its board has approved submission of a binding bid to acquire a majority stake in South Korea’s cash-strapped sport-utility vehicle maker Ssangyong Motor Co. (003620.SE).
The potential acquisition of Ssangyong will provide Mahindra with a ready portfolio of SUVs and sedans, as well new engines and vehicle development technologies. Ssangyong’s vehicle portfolio includes sport-utility vehicles Rexton II, New Kyron, Actyon, a multi-purpose vehicle Rodius and a sedan Chairman W.
Mahindra, India’s largest sport-utility vehicle maker by sales, wants to buy Ssangyong to take a major leap into the global automotive field. The South Korean auto maker, with its international presence, might help Mahindra in fulfilling its global ambitions, which include introducing a compact diesel pickup truck in the U.S. based on its Scorpio platform.
“We want to buy it for the world market,” Pawan Goenka, Mahindra’s president in charge of the automotive business, said in an interview Thursday. “We can’t justify buying it only for the Indian market.”
The Mumbai-based company previously withdrew from the race to buy Jaguar and Land Rover from Ford Motor Co. (F). The two U.K.-based luxury marquees were acquired by Tata Motors Ltd. (TTM) in 2008.
The decision to bid for Ssangyong comes after Mahindra was among six companies worldwide who qualified in June to conduct due diligence on South Korea’s fourth-largest auto maker by sales, Ssangyong.
India’s Ruia Group, South Korean private-equity fund Seoul Invest, as well as Daewoo Bus, and Renault SA (RNO.FR) in alliance with Nissan Motor Co. (7201.TO) and its South Korean unit Renault Samsung Motors Corp. are among others short-listed.
Mahindra didn’t elaborate on the possible bid in a statement to the Bombay Stock Exchange.
The company has also been trying to develop new technologies or gain access to them through acquisitions. As part of its efforts, Mahindra earlier this year acquired a majority stake in India’s Reva Electric Car Co. The company plans to use Reva’s technology to make electric variants of its light trucks Gio, Maximmo and other utility vehicles.
It sells utility vehicles such as the Xylo, Scorpio, Bolero, sedan Logan and other light truck and three-wheeler models.
Ssangyong has been under court-led bankruptcy protection since early 2009 after suffering a severe cash shortage.
The company in July extended the deadline for binding bids by three weeks as some of the six bidders sought more time for due diligence on the company. The deadline has been extended to 0600 GMT Aug. 10 from 0600 GMT July 20, Ssangyong had said.
The bidders were originally expected to perform preliminary due diligence on Ssangyong Motor from June 7 to July 17. The deadline for the submission of binding bids was July 20 and one or more preferred bidders was scheduled to be selected in August.