Indian automaker Mahindra & Mahindra mulls offer pegged at $400 million for South Korea’s automaker Ssangyong Motor

Emerging reports over the weekend said that Indian automaker; Mahindra & Mahindra is mulling a possible offer for South Korean automaker, Ssangyong Motor. In its quest to increase its global foothold and become a major player, the Indian company is thought to mulling a potential purchase pegged at $400 million, said the reports. The move comes in the wake of the financial woes that have continually plagued the South Korean auto maker, prompting reports that it might be up for a possible sale.

Mahindra & Mahindra has always reiterated that it is keen on stamping its presence globally as a utility vehicles manufacturer.  Sources believed to be privy to the talks said the Indian firm is keen on offering a competitive bid before the deadline ends on Tuesday. Analysts however believe Mahindra may be keen on fighting competition after it lost the 2008 Ford Motors Co’s sale of the Jaguar and Land Rover brands to Tata Motors.

A company source, speaking on condition of anonymity, said Mahindra is keen on making a bid, pegged at $400 million or more if need be.  Mahindra & Mahindra is India’s biggest utility vehicles manufacturer and its bid will be the sixth shortlisted bid for the takeover of the troubled North Korean firm. The cash trapped Ssangyong Motor has been undergoing restructuring since 2009. Other major auto manufacturers in the offing include Renault-Nissan alliance and the Ruia group based in Kolkata, India.

However, Renault-Nissan has always maintained that its interest in the North Korean firm is for its plant capacity, given the fact that Renault-Nissan’s South Korean automaker, Renault-Samsung requires additional capacity for Nissan-badged cars for the Russian and Middle East markets. Ruia on its part has a history of acquiring financially strapped assets, such as its acquisition of Dunlop; however, its chairman reiterated that the company had not yet decided if it would be making a bid for the South Korean auto manufacturer.

The move by the Indian auto manufacturers for overseas acquisitions is motivated by a need to expand their presence beyond India, despite the country’s impressive growth margins in the auto vehicles market. As such, the companies might be keen on taking advantage of offshore markets that have generally higher car price margins. Analysts said it was only obvious that Indian auto makers would want to seek acquisitions overseas as it presents the quickest way to attain a global foothold as opposed to organic growth.

9 Aug 2010.