Ssangyong Motor Acquisition Deal Hits Roadblock Amid Price Disagreements

Strategic Insights -

South Korean creditors of Ssangyong Motor have requested China National Blue Star Group to revise its final offer for the country's fourth-largest carmaker, citing concerns over price and other sales terms. Despite the Chinese company's willingness to pay between $600m and $700m for the acquisition, creditors are seeking a more definitive price and a supporting letter from Beijing to ensure the deal's approval. This development has sparked fears that the deal may not come to fruition, potentially jeopardizing the planned completion by the end of May.

Key Takeaways:

  • Ssangyong Motor's creditors have asked China National Blue Star Group to revise its final offer for the acquisition, citing disagreements over price and sales terms.
  • The Chinese company has offered to pay between $600m and $700m for the acquisition, which would be the largest overseas investment by a Chinese company.
  • Creditors are seeking a more definitive price and a supporting letter from Beijing to dispel speculation that Blue Star might fail to obtain government approval.
  • Blue Star signed a preliminary agreement with creditors in December to buy a 49% stake in Ssangyong and conducted due diligence at the company's main plant in late February.
  • Ssangyong's annual production capacity is 180,000 vehicles, and the company was put up for sale after creditors took control in late 1999 due to the Asian financial crisis.
  • Sales at Ssangyong Motor dropped 25% to 10,462 units last month, affected by weak domestic spending.
  • Blue Star plans to invest $1bn in Ssangyong by 2010.

Statistics:

  • $600m-$700m: The range of the Chinese company's offer for Ssangyong Motor's acquisition.
  • 180,000: Ssangyong's annual production capacity.
  • 49%: The stake being acquired by China National Blue Star Group in Ssangyong Motor.
  • 10,462: The number of vehicles sold by Ssangyong Motor last month, down 25% from the previous period.
  • $1bn: The planned investment by Blue Star in Ssangyong by 2010.

Sources:

  • "FT.com/autos" (retrieved on [date not specified])

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