Ssangyong Motor Final Bids Closed... SM vs Edison Likely a Two-Way Battle

Estimated Acquisition Amount in the 10 Trillion Won Range
Funding and Normalization Plan Are Key

[Image source=Yonhap News]

[Asia Economy Reporter Ki-min Lee] The main bidding to find a new owner for Ssangyong Motor will close on the afternoon of the 15th. To acquire Ssangyong Motor, financial capability and support plans for normalization are key, and it is expected that SM Group and the Edison Motors consortium will fiercely compete.

According to the industry, EY Han Young Accounting Corporation, the main sales agent for Ssangyong Motor, will close the submission of acquisition proposals from candidates by 3 p.m. today. The proposals must include the acquisition price, business normalization and operation plans, and intentions regarding employment succession. Han Young Accounting Corporation will evaluate the proposals and submit the results to the Seoul Bankruptcy Court. According to the original plan, Ssangyong Motor intends to select a preferred negotiation partner by the end of this month and conduct price negotiations next month.

In selecting the preferred negotiation partner, besides the acquisition price, the ability to inject operating funds in the future is expected to be an important criterion. To this end, the sales agent reportedly requested acquisition candidates to submit documents proving financial capability, such as bank balance certificates or loan commitment letters.

So far, 11 domestic and foreign companies have expressed their intention to acquire Ssangyong Motor, but the industry views the competition as a two-horse race between SM Group, ranked 38th in the business world by financial power, and the Edison Motors consortium, which has partnered with major domestic private equity funds KCGI and Keystone Private Equity (PE). The acquisition amount for Ssangyong Motor is estimated to be about 1 trillion KRW, including approximately 390 billion KRW in public bonds and future operating expenses.

SM Group, with assets totaling 10.45 trillion KRW, is expected to secure the acquisition funds in the 1 trillion KRW range solely from internal funds, as disclosed by Chairman Woo Oh-hyun of SM Group. Edison Motors has also changed the atmosphere recently by attracting large private equity funds as financial investors (FI). Edison Motors has already announced that it secured 270 billion KRW from individual investors and others. Additionally, it plans to raise about 250 billion KRW through a paid-in capital increase and convertible bond (CB) issuance by Semisysco, and to secure about 400 billion KRW in investments from FIs to prepare acquisition funds.

Both companies have recently emphasized not only their financial mobilization capabilities but also their suitability as acquisition candidates by highlighting electric vehicle transition and business synergies. SM Group expects synergies with its automotive parts affiliates such as Namseon Aluminum, TK Chemical, and Hwajin. Edison Motors anticipates that by utilizing its know-how in electric bus manufacturing, it can accelerate the development of Ssangyong Motor’s electric vehicles and increase sales.

Foreign capital is also considered a dark horse, including the Future Motors consortium, which attracted the former preferred negotiation partner, U.S.-based Cardinal One Motors (formerly HAAH Automotive), and Sinar Mas, an Indonesian conglomerate in power and resource development. However, since Cardinal One Motors’ funding details are unclear, there is speculation in the industry that it may focus on securing sales rights in the North American region instead of acquiring Ssangyong Motor. Furthermore, there are concerns within and outside Ssangyong Motor about attracting foreign capital, as foreign-owned companies such as China’s SAIC and India’s Mahindra have repeatedly undergone rehabilitation procedures after acquisition.