Mahindra and Mahindra is all set to move ahead with its bid on South Korean auto maker SsangYong. Sources report that M&M board has given its consent to the appropriate channels to submit a bid for acquisition of the SsangYong’s majority stake although there is no official statement from the company itself.
M&M is expected to fund this acquisition through a combination of debt and internal accruals. M&M has cash reserves of about Rs 5,000 crore. M&M has ruled out raising money via equity dilution for this acquisition as promoters stake in M&M is currently at 26.3% and any further fund raising via equity may dilute the stake to a level below 26%, which is not desirable.
Mahindra, which began operations in 1945 by assembling the iconic Willys Jeep in India under a licensing arrangement, is among six companies world-wide that qualified in June to conduct due diligence on cash-strapped Ssangyong, South Korea's fourth-largest auto maker by sales. The Ruias along with Mahindra & Mahindra and Renault-Nissan are among the six shortlisted bidders. SsangYong is expected to name the preferred bidder within a week of receiving the bids.
