[Asia Economy Reporter Yoo Hyun-seok] All four candidates?KG Group, Ssangbangwool Group, Pavilion PE, and ELBNT?who have stepped forward to acquire Ssangyong Motor are expected to submit formal acquisition proposals.
According to industry sources on the 5th, Ssangyong Motor and the lead sales agent EY Han Young Accounting Corporation completed the preliminary due diligence of the four companies that submitted letters of intent the day before.
The two-week preliminary due diligence, conducted from the 19th of last month, involved KG Group, Ssangbangwool Group, Pavilion PE, and ELBNT. Ssangyong Motor and the lead sales agent are proceeding with a "Stalking Horse" sale method, where a conditional investment contract is signed with a prospective buyer, and the final acquirer is determined through an open bidding process.
Acquisition candidates were sent bidding guidelines and are expected to submit conditional acquisition proposals by the 11th. Subsequently, based on acquisition proposals containing the acquisition amount and business plans, the stalking horse conditional contractee will be selected.
All four acquisition candidates have internally decided to submit acquisition proposals to the lead sales agent. In last year's Ssangyong Motor sale process, 11 companies including SM Group submitted letters of intent. However, only three?Edison Motors, ELBNT, and Indi EV?participated in the actual main bidding.
KG Group is forming a consortium with the private equity fund Cactus Private Equity (PE), which partnered with them during the 2019 acquisition of Dongbu Steel, to acquire Ssangyong Motor. KG Group is expected to secure 500 billion KRW by selling the environmental energy division of KG ETS, which is seen as giving them stronger financial capability compared to other acquisition candidates.
Ssangbangwool Group’s special-purpose vehicle manufacturing affiliate Gwangrim has formed a consortium with KH Philux. Although KB Securities withdrew its plan to participate in financing Ssangyong Motor’s acquisition, Ssangbangwool Group maintains that there is no issue with funding.
Pavilion PE plans to partner with financial institutions and automotive-related companies for this acquisition. ELBNT is also expected to raise acquisition funds through attracting overseas investment.
If the stalking horse contractee candidate’s proof of funds proceeds smoothly, a conditional investment contract is expected to be signed by the end of this month. Afterwards, Ssangyong Motor will conduct another bidding next month to select the final acquirer. If a candidate offers better terms than the one with the conditional contract during the main bidding, they can be selected as the final acquirer.
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