Edison Motor finalises SsangYong takeover

11 January 2022

South Korean carmaker SsangYong Motor has signed a takeover deal with a consortium led by electric carmaker Edison Motors, which has agreed to buy the debt-ridden company for ₩305 billion (€224.8 million).

SsangYong has been looking for a buyer in an attempt to rehabilitate its business. The manufacturer filed for bankruptcy in 2020 after failing to repay creditors. It has been under court receivership since April 2021 after majority stakeholder Mahindra and Mahindra, one of India’s largest car manufacturers, was unable to find a buyer for the South Korean OEM. Burdened by debt and falling vehicle sales, the company has been under pressure for months to locate a new owner.

SsangYong Motor is the fourth-largest South Korean carmaker and has been majority-owned by Mahindra since 2011, which has tried to sell its stake in the company since June 2020. Mahindra first bought a 75% stake in the ailing company in 2010, when SsangYong stood on the verge of insolvency.

But the Indian group has been unable to turn SsangYong’s business around, facing a lengthy procedure to attract a new investor due to the COVID-19 pandemic and the company’s worsening financial status.

SsangYong’s sales fell by 21% year on year in 2021 to just under 84,500 cars. It also reported an operating loss of ₩238 billion (€175.2 million) between January and September last year, from revenue of ₩1.8 trillion.

‘Difficult process’

‘By signing this contract, SsangYong Motor will be able to eliminate the uncertainties it faces in the future and provide an opportunity to spur the early business normalisation. SsangYong Motor plans to do its best to achieve business normalisation as soon as possible by submitting a rehabilitation plan as soon as possible, consenting to the assembly of stakeholders, and obtaining approval from the court as this contract has been concluded through a difficult process,’ the company said in a statement to investors.

Edison paid 10% of the acquisition costs this week. However, SsangYong will remain under administrative control until Edison has submitted its rehabilitation plans to the court by March. SsangYong’s new owner is known for manufacturing e-trucks and e-buses and plans to convert SsangYong into an electric brand.

Based in South Korea, Edison has grand ambitions and aims to overtake Tesla as an electric carmaker. The company recently partnered with hydrogen fuel-cell provider Plug Power to develop and bring to market an electric city bus. It sold the largest number of electric buses in Seoul last year and is primarily known for its bus technology.

The deal comes two months after Edison and SsangYong first signed a memorandum of understanding. Local media report the two companies have previously clashed on the acquisition amount and differences over management rights, resulting in a delay of the acquisition deal.

With Edison hoping to transform SsangYong into an electric brand, SsangYong made a timely announcement this week, revealing it had started taking reservations for its first electric SUV, the Korando e-Motion. Priced at between ₩38.8 million and ₩43.9 million, the car could lure in new customers and will initially be launched in South Korea in March.