Bidding war for SsangYong Motor likely to be between two main candidates

SsangYong Motor's Pyeongtaek plant in Gyeonggi [YONHAP]

The bidding war to acquire SsangYong Motor is likely to become a one-on-one race between Ssangbangwool Group and KG Group, though at least two more companies have also reportedly showed interest in buying the financially troubled automaker.

Companies from both home and abroad have voiced their intention to buy the debt-laden auto company since an acquisition deal by Edison Motors fell apart early this month.

Ssangbangwool Group submitted its letter of intent to acquire SsangYong Motor last week to EY Hanyoung, the lead manager of the deal. It selected PwC Samil as the deal’s lead consultant.

KG Group also said in a regulatory filing last week that it is considering bidding for SsangYong to raise its competitiveness.

KG Group is a chemical-to-steel conglomerate which has its foundation in Gyeonggi Chemical, Korea's first fertilizer manufacturer that was established in 1954. Gyeonggi Chemical is now called KG Chemical and acts as the de facto holding company of the group.

KG Group reportedly plans to form a consortium with local private equity company Cactus Private Equity to acquire SsangYong and work together with its steel-making affiliate KG Steel.

Ssangbangwool Group formed a consortium with local construction company KH Group and put Kanglim in charge. Kanglim is a fire and tanker truck manufacturer with a 12.4 percent share of Ssangbangwool.

Ssangbangwool's plan is to have SsangYong Motor, which has yet to make the transition to electric vehicles (EVs), and Kanglim, which is developing an electric powertrain for special vehicles like fire trucks, work together.

At least two or three more companies have showed interest in the beleaguered carmaker, according to industry sources.

“After the deal with Edison Motors fell apart, creditors and Chung Yong-won, court-appointed manager for SsangYong Motor, held a closed-door meeting,” an industry source said.

“The creditors asked what SsangYong Motor’s future plan is, and Chung told them three or four more companies including some from overseas will come forward soon.”

U.S.-based auto retailer HAAH Automotive Holdings and U.S. EV start-up Indi EV, both of which participated in the acquisition deal for SsangYong last year, may be interested in again trying to acquire the Korean company, but nothing has been confirmed yet.

SsangYong Motor plans to select a preferred bidder first and then initiate an open bid.

“If we start an open bid from the start, there are concerns that some bidders will bid too low,” the SsangYong Motor spokesman said.

“If there is a company that offers more, the preferred bidder can be changed.”

KG Chemical, the de facto holding company of KG Group, posted 4.9 trillion won ($4 billion) in revenue last year and an operating profit of 467.1 billion won.

KG Steel posted 3.4 trillion won in revenue and 296.9 billion won in sales.

The revenues of Ssangbangwool Group’s seven listed companies including Ssangbangwool and Kanglim totaled 632.1 billion won last year.

SsangYong Motor’s revenue last year came to 2.4 trillion won.
“We are thoroughly looking into the candidates so that a similar situation to last year, when SM Group emerged as a strong candidate but dropped out in the middle, doesn't happen again,” the SsangYong Motor spokesman said.

BY JIN EUN-SOO, BAEK MIN-JEONG [jin.eunsoo@joongang.co.kr]