Mid-sized conglomerate to gobble up struggling SUV maker
South Korea’s automaker SsangYong Motor, which is owned by India’s Mahindra & Mahindra, announced on May 13 that a consortium led by KG Group had been picked to purchase the cash-strapped company.
The Seoul-based outfit said that a Seoul court had selected the KG Group consortium after reviewing the bid price, fundraising plans, and the length of period to guarantee employment.
Debt-laden SsangYong, the maker of sports utility vehicles, has been put under the court receivership since early 2021.
“We are set to sign a stalking horse contract with the KG Group consortium as soon as possible. Hence, the acquisition price is not decided yet,” a SsangYong spokesman said.
In the stalking horse method, the preliminary bidder is required to come up with its price for SsangYong, and other bidders can submit their prices later.
If a bidder suggests a price higher than that of KG Group, SsangYong will ask the stalking horse if it can increase the bidding price.
“The stalking horse bid appears to be complicated. However, KG Group is likely to take over SsangYong Motor,” Prof. Kim Pil-soo at Daelim University said.
“As KG Group has a financial leeway, the expectation is high that SsangYong will be able to rebound thanks to the deep-pocketed new owner,” he said.
KG Group is a mid-sized South Korean conglomerate that has affiliates in such businesses as steel, chemical, info-tech, education, and news media.
Originally, South Korean electric vehicle manufacturer Edison was supposed to acquire SsangYong Motor.
After paying some 10 percent of the acquisition money in January, which stood at some $250 million, the company failed to deliver the remaining 90 percent this March.
Hence, the M&A procedure started from scratch, and a few Korean corporations threw their hats into the ring, including KG Group, heavy-duty vehicle maker Kanglim, and EV component producer EL B&T.