Edison Motors bags SsangYong from court receivership, M&M 'to co-operate with transition'

SsangYong Motor Company (PC-Shutterstock)

Cash-strapped carmaker SsangYong Motor has finally got sold to a South Korean consortium. The consortium led by electric car company Edison Motors has agreed to acquire debt-ridden SsangYong Motor for 305 billion won ($254.65 million).

The company had been under court receivership after Mahindra & Mahindra pulled out of the cash-strapped car maker some time ago. Back in September, 11 investors showed interest in acquiring SsangYong, seven undertook due diligence, and three participated in the bids.

The poor financial condition of SsangYong Motor is the reason why very few bids came in finally. SsangYong was burdened with high debt and its vehicle sales last year fell about 21 percent from a year earlier. The automaker reported a January-September 2021 operating loss of 238 billion won and a revenue of 1.8 trillion won.

Mahindra Group had been looking to exit the South Korean automaker, which it had bought from near-bankruptcy in 2010. M&M was unable to find a buyer for SsangYong for a very long time, and SsangYong's financials worsened further.

On its part, Mahindra Group on January 12 said that it is “happy to hear” that Edison Motors has formally agreed to acquire SsangYong Motor Company (SYMC).

“Happy to hear that Edison Motors has formally agreed to acquire SYMC. The acquisition will progress to the next stage in a defined time frame. Mahindra and Mahindra will co-operate with the new investor in enabling the transition,” the statement read.

Earlier in October 2021, Korea-based bus maker Edison Motors promised to make fresh investments of more than Rs 6,300 crore if it wins the bid.

SsangYong has been a troubled unit for M&M despite several attempts by the Anand Mahindra-led company to turn it around. The cash-strapped Korean company posted losses for more than 15 consecutive quarters and has been struggling to stay afloat. The Korean car brand even sold non-core assets to generate liquidity in 2020.

During FY20, M&M wrote off investments of around Rs 2,000 crore it made in SsangYong after putting its entire stake in the Korean company for sale in February that year. Also, in April 2020, M&M announced that it will not make any further investments in SYMC and declined SYMC’s request for fund infusion following the business disruption caused by the COVID-19 pandemic.

Mahindra and SYMC jointly developed the X100 platform which saw the birth of Mahindra XUV300 compact SUV in India and the SsangYong Tivoli in Korea. Mahindra also experimented with launching SsangYong SUV under its namesake brand. The Alturas premium SUV from Mahindra was a rebranded SsangYong G4 Rexton.

With inputs from Reuters.