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Monday July 05, 03:20
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SAIC and US fund shortlisted for Ssangyong
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Shanghai Automotive Industry Corp (SAIC) of China and a US pension fund emerged as the shortlisted bidders most likely to acquire Ssangyong Motor, the South Korean carmaker’s main creditor bank said on Monday.
Chohung Bank, which is leading other creditors in the negotiations to sell off South Korea’s fourth-largest carmaker, said one of the candidates would soon be chosen as the single preferred bidder to sign a contract in August.
Four investors have submitted letters of intent for the takeover after talks with China National Blue Star Group, a chemicals conglomerate, broke down over price and other terms in late March.
The decision resurrects the possibility that SAIC may ink the first Chinese acquisition of a foreign carmaker. If it succeeded, the deal would help the state-owned Chinese carmaker advance its technology while giving Ssangyong a foothold in China.
“Securing independent technology is very important for Chinese automakers, because they have only assembled car parts in partnership with foreign automakers. That’s why they are so eager to take over Ssangyong,” said Sohn Jung-won, an analyst at Goodmorning Shinhan Securities.
SAIC originally lost a battle with Blue Star to be chosen as the preferred bidder for Ssangyong in December but said that its bid was the only one approved by Chinese authorities. Blue Star came back to the race, but was not likely to win the deal.
Chohung said the US pension fund included a strategic investor. General Motors, which has a partnership with SAIC in China, expressed interest in Ssangyong last year but had not made an offer for it. The US group maintains a presence in South Korea through its GM Daewoo subsidiary.
Ssangyong, which has an annual production capacity of 180,000 vehicles, was put up for sale in 1999 after creditors took control in the wake of the Asian financial crisis. The carmaker’s debts of $1.1bn exceed its market capitalisation of about $1bn. Ssangyong, which produces the Rexton and Korando sport-utility vehicles, sold 13,345 vehicles last month, exporting more than 20 per cent of overall sales.
To prevent a recurrence of a rupture in the sale, creditors plan to open a channel of negotiations with an alternative bidder and demand a 5 per cent down payment from the preferred bidder when they sign a memorandum of understanding.
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