Mahindra & Mahindra, India's biggest utility vehicles and tractor maker has signed an agreement to buy a controlling stake in the cash-trapped Ssangyong Motor, South Korea's fourth-largest automobile manufacturer, for $463 million (522.5 billion won).
The two automakers announced the deal today after Ssangyong had named M&M the preferred bidder in August among the various bidders that included South Korean private equity fund Seoul Invest and a group led by the French-Japanese Renault-Nissan combine, India's Ruia Group and Young An Hat Co, a south Korean headgear company that also owns bus maker Daewoo Bus Co. (See: Ssangyong names M&M as preferred bidder)
Under the $463 million deal that was signed by Pawan Goenka, Global Automotive president of M&M and Lee Yoo-il, co-manager of Ssangyong, M&M will buy $378 million in new stock to be issued by SsangYong and $85 million in corporate bonds for a 70-per cent stake.
The deal is expected to be completed in March 2011.
M&M will operate SsangYong as a separate entity and retain the top management that is made up of South Koreans.
Since SsangYong workers have developed a recent tendency of resorting to strikes, M&M, SsangYong and its labour union signed an agreement where M&M has guaranteed long-term employment for workers as well as investment in return for a pledge by unionised workers not to stage any illegal strikes.