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/Seoul, Aug 12 (IANS) Automobile major Mahindra and Mahindra (M&M) Thursday emerged the preferred bidder to acquire South Korean Ssangyong Motor.
The preferred bidder status is given by the vendor who usually intends to sell its business interest to a third party. The status is decided by a set of predetermined criteria which are subject to the completion of negotiations and legal arrangements.
'Preferred bidder status would require the company to enter into a memorandum of understanding (MOU), followed by a confirmatory due diligence process and signing of definitive agreements thereafter,' M&M said in a statement.
The South Korean carmaker and its creditors said in Seoul that they planned to sign a memorandum of understanding with M&M by the end of the month and finalise the sale by November. They did not release details about M&M's offer.
Media reports say SsangYong has run up a debt of $1 billion. The Chinese carmaker Shanghai Automotive Industry Corp (SAIC) had earlier failed to turn it around and reduced its stake in SsangYong from a majority 51 percent to a mere 3.8 percent. In December 2009, the Seoul Central District Court approved the debt-ridden SsangYong's restructuring plan.
M&M is rivalled in its acquisition plans by Kolkata-based Ruia group, which Ssangyong has named a reserved bidder, and South Korea's Young An.
Both M&M and the Ruia group have been eying Ssangyong for its technology and and access to markets overseas, where car prices and profit margins are said to be higher. Ssangyong, which has about two percent of the South Korean market, exports to Russia, Europe, China, Middle-East, Africa, North and South America and the Asia-Pacific.
Ssangyong, produces a whole range of sports utility vehicles (SUVs) which fits into M&M's portfolio. The potential deal would give Mahindra access to many overseas markets as it aims to be a global player in the segment.
It would also give it access to new technologies, particularly in diesel engines, which could be used for Mahindra's existing vehicle range.