Wednesday, August 25, 2010

Mahindra & Mahindra might share platforms with Ssangyong Motor in future

Indian utility vehicles and tractor maker, Mahindra & Mahindra, said that it aims to finish the acquisition process of South Korean automaker, Ssangyong Motor, in four months. The Indian SUV and tractor maker signed a MoU to buy majority stake in Ssangyong Motor earlier this month.

Pawan Goenka, President, Mahindra & Mahindra, said Ssangyong will continue operating as a separate unit and it would have a South Korean CEO. In a statement, Anand Mahindra, Vice Chairman and Managing director, Mahindra & Mahindra said,

“Korea is one of the world’s leading centres of automotive excellence and Ssangyong brings with it a rich legacy of R&D and innovation...The synergies between both the brands, which share a similar heritage, will make us a combined force to reckon with in the global SUV space,”

According to analysts, the take over would cost M&M around $500 million. Ssangyong has a debt of $640 million. M&M has a cash reserve of more than $500 million. The company maintains a debt to equity ratio of 0.3 percent lowest among the industry.

Mahindra & Mahindra also said that it might share vehicle platforms of the company. Mr. Gowenka said that a synergy between the two companies would help bringing down the cost of vehicle developments in future.

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