Shown above is the head office of SsangYong Motor, south of Seoul. A few candidates are trying to take over the struggling maker of utility vehicles. Photo courtesy of SsangYong Motor

Kanglim and KG Group throw hats into the ring

Two South Korean companies have expressed their intention to purchase SsangYong Motor, the SUV producer owned by India’s Mahindra & Mahindra.

Kanglim, a producer of heavy-duty vehicles and equipment, and its parent company Ssangbangwool said on April 6 that they had sent a letter of intent this month to take over SsangYong.

Kanglim noted that it had secured enough funds to purchase SsangYong through Seoul-based brokerages of KB Investment & Securities and Eugene Investment.

“The acquisition of an automaker would help us create great synergy in our new businesses. As we have prepared for necessary funds, we will pull out all the stops to buy SsangYong,” a Kanglim official said.

KG Group, which operates subsidiaries in the steel, chemical, and media industries, also thinks of throwing its hat into the ring. The outfit has a financial leeway of more than $700 million.

“We have yet to make any decision. But we are optimistic about obtaining SsangYong Motor, and discussion with a private equity fund is also underway,” a KG Group official said.

Originally, Seoul-based electric vehicle maker Edison Motors was supposed to take over cash-strapped SsangYong, as it was picked as the preferred bidder last year.

After paying 10 percent of the acquisition money, which amounts to some $250 million this January, however, Edison failed to deliver the remaining 90 percent last month. Hence, the deal fell apart.

SsangYong is required to find a new owner in a hurry as its court receivership will finish soon.

“We filed for court receivership in December 2020, which was accepted in April 2021. This means it will finish this month, although the yearlong receivership can be extended by six months,” a SsangYong spokesman said.

“We applied for the six-month extension this week. Before the receivership comes to an end, we have to find a new owner.”

Experts pointed out that both Kanglim and KG Group would be better purchasers from the perspective of SsangYong.

“Compared to Edison Motors, both Kanglim and KG Group have deeper pockets. To put SsangYong back on track, a potential candidate needs more than $400 million. Kanglim and KG Group appear to have to capacity to provide the funds,” Prof. Kim Pil-soo at Daelim University said.

“And I believe that SsangYong should come up with more proactive self-rescue plans like substantially cutting its payroll.”