SsangYong Motor, the South Korean sports utility vehicle maker, which was put under bankruptcy protection last year, has listed six companies as its possible buyers, including Mahindra & Mahindra and the Ruia Group, of the original list of seven.
The cash-strapped manufacturer said today it had rejected the interest of one company that had given a letter of intent, without citing any reasons.
The names of the other listed bidders were also not disclosed by it. However, sources confirmed that M&M, India's largest maker of SUVs, and the Ruias, owners of the Dunlop tyre brand in this country, were on the list.
While an M&M spokesperson declined to comment when asked, a Ruia Group spokesperson said, "We are happy to be among the list of short-listed companies. We will duly carry out the next set of processes as may be required."
Other companies which had earlier confirmed their participation include Korean private equity fund Seoul Invest and South Korea's Daewoo Bus Corp. Japanese car maker Nissan Motor Company and the Korean subsidiary of Renault had also confirmed their bids.
The listed companies will conduct a preliminary due diligence for about a month before giving binding bids by July 20. The preferred bidder will be chosen in August. The deal size isn't confirmed but estimates say it could be worth around $500 million (Rs 2,300 crore).
The M&M stock on the Bombay Stock Exchange (BSE) today closed 0.42 per cent higher at Rs 585.20, while shares of Dunlop fell 2.4 per cent to close at Rs 71.30, as compared to the previous days' close. SsangYong Motor Company closed 1.86 per cent higher, at 13,700 won.
"It's difficult to elaborate anything any further, as we do not know what the price of the company would be. We would be in a position to talk about our seriousness in SsangYong only after we know its right valuation," added Ruia spokesperson.
SsangYong is South Korea's smallest car maker, with a market share of only two per cent. It has been under court protection since early last year. And, has managed to generate multiple interest from domestic and international players, purely on the back of its technological advancements in market reach.
For M&M, which is present in the economically-priced mass SUV segment, SsangYong provides the right mix of products, as these are positioned in the segment above their own, said Pawan Goenka, M&M's president (automotive and FES), last week.
The Mumbai-based company is making an attempt at foraying into the premium segment with the launch of an all-new SUV next year. The company had earlier maintained that it always wished to be in the premium segment of SUVs. M&M had also lost the bid to buy Land Rover from Ford before the deal went in favour of Tata Motors.
As for the Kolkata-based Rs 2,800-crore Ruia Group, the buyout would propel it into the automotive segment which the company has been associated with for some time. Apart from Dunlop, the company also owns Falcon and Monotona tyres.
After acquiring Dunlop Tyres in 2005 and with the successful turnaround of sick public sector company Jessop & Co, the company believes it has the expertise to run sick units and turn these into profitable ventures.
International analysts feel it will not be easy to turn around the loss-making SsangYong, given the falling popularity of its vehicles, its aged production facilities and its active labour union.
