Mahindra & Mahindra to Bid $400 Million for Ssangyong Motor

Strategic Insights -

India's Mahindra & Mahindra, the country's largest utility vehicles and tractor maker, is set to participate in the bidding process for the troubled South Korean automaker Ssangyong Motor. With cash reserves of nearly 20 billion rupees, Mahindra is well-positioned to make a significant bid, reportedly up to $400 million, for Ssangyong, which has been under court-led restructuring since 2009. This move comes as Indian automakers seek to expand their presence overseas, where car prices and profit margins are typically higher. Mahindra's bid is part of a competitive process, with six bidders shortlisted, including Renault-Nissan Alliance and Kolkata-based Ruia group.

Key Takeaways:

  • Mahindra & Mahindra is expected to bid up to $400 million for Ssangyong Motor, with three sources confirming the development.
  • The Indian automaker had previously lost out to Tata Motors for Ford Motor Company's luxury brands Jaguar and Land Rover in 2008.
  • Mahindra plans to be an aggressive bidder for Ssangyong, which has been under court-led restructuring since early 2009.
  • The deal will strengthen Mahindra's presence in the utility vehicles segment globally and provide a manufacturing base in south-east Asia.
  • Ssangyong exports vehicles to a number of countries, including Russia, Europe, China, the Middle East, Africa, North and South America, and the Asia-Pacific.
  • Ssangyong's sales figures have shown an improvement in the last few months, with analysts expecting an operating profit of $200 million on a topline of $2 billion in 2011.

Statistics:

  • Mahindra has cash reserves of nearly 20 billion rupees.
  • The Automaker has a low debt to equity ratio of 0.4, which gives it the ability to raise funds.
  • Ssangyong has been under court-led restructuring since early 2009.
  • Ssangyong exports vehicles to a number of countries.
  • Ssangyong's sales figures have shown an improvement in the last few months.

Sources:

  • Reuters
  • www.tradearabia.com
  • Al Hilal Publishing & Marketing Group
  • Avendus Capital
  • Brics Securities