Indian SUV maker Mahindra & Mahindra has been named as the preferred bidder for struggling South Korean manufacturer Ssangyong.
Ssangyong is currently being restructured under court guidance after raking up debts of $634 million (£400m). Last year its workforce staged violent strikes, causing the delay of the firm’s flagship model, the C200. It has still not been launched a year on.
Mahindra’s intended purchase of Ssangyong would give it access to the South East Asia market where it currently has no presence and also new technologies, including diesel engines. Mahindra also has a good record of sorting out industrial disputes.
It is believed to have bid around $400m (£250m) for Ssangyong, which has a two per cent market share in its domestic market. Mahindra shares dropped one per cent on the news that it had been named as the preferred bidder, but industry analysts told Auto News that the purchase will have benefits for the Indian firm in the future.
“The acquisition could be slightly negative for Mahindra in the near term because Ssangyong is a small player and scalability is limited. So Mahindra will have to make some investments," said an analayst from Prabhudas Lilladher. "I am guessing it would take two to three years for Mahindra to turn around the company. That is when we expect the benefits to kick in.”