After a 12-year long journey, Mahindra & Mahindra is finally letting go of SsangYong. A consortium headed by the South Korean electric bus and truck maker, Edison motors, is willing to acquire SsangYong for $254.56 million. Edison motors have asked for a 95 percent stake in SsangYong against its investment. SsangYong’s sales declined 21 percent in 2021 with the company reporting an operating loss of ₹ 1,473 crores.
What Happened?
Back in 2010, Mahindra had paid $463 million to acquire a 70 percent stake in SsangYong and later on increased it to 75 percent. Mahindra aimed at bringing the brand back by building an SUV body type. Under M&M, SsangYong managed to grab some attention by selling the Rexton, but soon the tides turned, and Mahindra’s dreams of expanding its SUV market through its subsidiary were crushed to dust. In 2021, SsnagYong’s sales dipped by 21 percent, and the brand sold only 84,000 units.
From January to September 2021, SsangYong recorded an operating loss of more than $200 million. Not just that, thanks to SsangYong, M&M had taken an impairment of ₹1,210 Crore on its behalf in the last financial year. Seeing the fate of the brand, in 2020, M&M announced that it shall not be investing any more money in SsangYong and is willing to sell out the company. But the Mahindra Group could not find any buyers at the time. In late 2020, SsangYong announced bankruptcy with an outstanding loan of $84 million.
The Sell
Even though Mahindra ceased consolidating SYMS as a subsidiary from 2020, according to the company act of 2013, SsangYong is indeed a subsidiary of the Mahindra Group. Post declaring bankruptcy SYMC was under court receivership, and M&M tried their level best to sell out their stakes in the brand but found no luck. Fast-forwarding to the present time, the Edison-led consortium has agreed to buy SsangYong Motor Company or SYMC and has asked for a 95 percent stake in the company. The consortium is paying $254.6 million to acquire the stakes.
Official Statements
While the consortium is paying nearly $250 million, “The Company will not receive any consideration on account of the proposed primary investment being made by a consortium led by Edison Motors Co in SYMC,” M&M clarified. An M&M Spokesperson also said, “We are happy to hear that Edison Motors consortium has formally agreed to acquire SYMC and that the acquisition will progress to the next stage, in a defined time frame. We will co-operate with the new investor in enabling the transition.”