Ssangyong Motor and Mahindra Sign Definitive Agreement
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Ssangyong Korando C
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26th December, 2010
- Total cost of acquisition of US$ 463 million with US$378 million in new stocks and US$85 million in corporate bonds
- Mahindra will acquire 70% stake
- Deal expected to be concluded by March 2011
Ssangyong Motor Company Limited (SYMC) and India’s Mahindra & Mahindra Ltd. (M&M) its preferred
bidder, has announced the signing of a definitive agreement in Seoul. The agreement which was signed by Mr.
Yooil Lee and Mr. Youngtae Park, Joint Receivers of SYMC and Dr. Pawan Goenka, President, Automotive &
Farm Equipment Sectors, M&M, in the presence of key staff and advisors to both groups.
“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”, said Mr. Yooil Lee.
“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. We are committed to leverage the combined synergies by investing in a
new Ssangyong product portfolio to gain momentum in global markets”, said Dr. Pawan Goenka.
Dr. Goenka added, “There is 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.”
SYMC is undergoing a corporate rehabilitation process since February 2009 and the court receivership will
conclude upon court approval and the termination of corporate rehabilitation process.
Mahindra is committed to nurturing the Ssangyong brand in global markets while preserving its Korean
heritage. It is intended that SYMC will continue to function as an independent entity with primarily a
Korean management. The acquisition will offer financial stability to SYMC and the two companies will work
to further strengthen Ssangyong’s product portfolio across the globe. The inherent strengths of Ssangyong
combined with Mahindra’s expertise will help in building a global SUV major.
The labour union of SYMC, M&M and SYMC have also signed a Tripartite Agreement which contains
provisions for employment protection, long-term investment and commitment for no labor dispute.
There are strong complementarities between the Ssangyong and Mahindra portfolio of products, providing
an opportunity to make distinct market positioning. The wide sales and distribution networks and
complementary product lines will provide access to many overseas markets for both companies.
The Definitive Agreement
The definitive agreement contains information related to securing outside investment, the establishment
of principal management, repayment of rehabilitation claims to protect the interests of creditors, such as
creditors and shareholders, and establishing a foothold for SYMC normalisation.
The total cost of acquisition is US$463 million with US$378 million in new stock and US$85 million in
corporate bonds. Mahindra will acquire a 70% stake.
The definitive agreement also encapsulates terms and conditions related to the process of acquiring new
stock and corporate bonds, down payment and deposit guidelines, repayment of rehabilitation claims,
employment guarantees, and other covenants. M&M has already deposited 10 per cent of the final
purchasing price per terms of the definitive agreement, with the remaining balance to be deposited three
days prior to SYMC’s stakeholder meeting. SYMC will update its corporate rehabilitation plan to include
reference to repaying liabilities with cash-in from the deal, and will be required to receive approval
from creditors and the court on the updated plan. After completing all the acquisition procedures and the
repayment of rehabilitation claims, the corporate rehabilitation process is likely to be finished by March,
2011.
The next steps
January 2011: Approval of Revised Corporate Rehabilitation Plan by Creditors
February/March 2011: Completion of Acquisition
Exchange Rate Used: US$I = KRW1129
About Ssangyong Motors:
As a manufacturer of sports utility vehicles (SUV) and recreational vehicles (RV), SsangYong
manufactures products in Korea. Founded in 1954, it has been manufacturing automobiles for more than five
decades.
In 1988, it developed a compact 4WD SUV, Korando, which was the first SUV manufactured in Korea. Since
then it has established its reputation for innovation, leadership, and quality in the SUV field in
Korea.
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Its next SUV the Musso was a great success in Korea and key export markets like Western Europe. In 1997,
it launched a passenger car, the Chairman. Since then it has launched a number of SUVs and a new version
of the Chairman named Chairman W in 2008. Its latest SUV, a monocoque compact SUV, named Korando C was
launched in export markets in October 2010. It will be released in Australia during 2011.
Ssangyong has a strong domestic network of over 130 dealers and exports to over 90 countries through
over 1,200 dealers.
About The Mahindra Group
Mahindra embarked on its journey in 1945 by assembling the Willys Jeep in India and is now a US$7.1
billion Indian multinational company. It operates across the globe and enjoys a leadership position in
utility vehicles, tractors and information technology, with a significant and growing presence in
financial services, aerospace, aftermarket, real estate, hospitality, logistics. The Mahindra Group
today is an embodiment of global excellence and enjoys a strong corporate brand image.
Mahindra is the only Indian company among the top tractor brands in the world. It is today a full
range player with a presence in almost every segment of the automobile industry, from two-wheelers to UVs,
SUVs and CVs. Mahindra has acquired a majority stake in REVA Electric Car Co Ltd. (now called Mahindra
REVA), strengthening its position in the Electric Vehicles domain.
The Mahindra Group expanded its IT portfolio when Tech Mahindra acquired Satyam Computer Services, now
known as Mahindra Satyam.
Its flagship company Mahindra & Mahindra Limited has recently earned the distinction of being the
only Indian automobile manufacturer to feature in the top 10 list of the Carbon Disclosure Leadership
Index in India, - 2010, as determined by the Carbon Disclosure Project (CDP). CDP is an independent
notforprofit organisation holding the largest database of primary corporate climate change information
in the world.
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