Financial Power Battle, Ssangyong Motor Acquisition Race Narrows to Two: SM Group vs Edison Securing Allies

[Asia Economy reporters Ki-min Lee and Je-hoon Yoo] The acquisition battle for Ssangyong Motor is shaping up as a two-way contest between SM Group and Edison Motors. To acquire Ssangyong Motor, the key factors are the ability to mobilize funds in the 1 trillion KRW range as well as operational capabilities after mergers and acquisitions (M&A), including electric vehicle production and sales. Edison Motors has secured numerous allies in terms of financial strength, which was previously a weak point.

According to industry sources on the 9th, among the nine companies that submitted letters of intent to acquire Ssangyong Motor, four?SM Group (Samra Midas), Edison Motors, Future Motors Consortium (including HiGen Solution and three other companies), and KS Project Consortium (including K-Pop Motors and three other companies)?are confirmed to be participating in the preliminary due diligence. Ssangyong Motor plans to complete the preliminary due diligence by the end of this month, receive acquisition proposals next month, select a preferred bidder, and proceed with the final due diligence and investment contract by the end of October.

Industry insiders and creditors point out that acquiring and operating Ssangyong Motor requires an infusion of 800 billion to 1 trillion KRW, including public bonds, making fund mobilization a prerequisite. The "price" is considered the key issue in the Ssangyong Motor M&A.

In terms of financial strength alone, SM Group, ranked 38th in the business world and a surprise entrant in the acquisition battle, is evaluated to be ahead. However, Edison Motors, a leading domestic electric bus manufacturer regarded as a strong candidate in terms of technology and post-acquisition synergy, has also secured financial resources, solidifying a two-horse race atmosphere. Edison Motors commercialized electric buses domestically for the first time, ranked first in market share in Seoul last year, and possesses advanced technology to the extent of leading collaborations in autonomous driving with the Ministry of SMEs and Startups. However, it has been evaluated as lacking in funds until now. Last month, Edison Motors secured financial strength by forming a consortium agreement with KCGI following domestic private equity firm Keystone Private Equity (PE).

Edison Motors plans to combine its electric motor and battery management system (BMS) technology with private equity funding to develop Ssangyong Motor into a global electric vehicle manufacturer. Kang Young-kwon, chairman of Edison Motors, stated, "Electric vehicles require unified electronic control and autonomous driving systems, and we have considerable technological capabilities. If we acquire Ssangyong Motor and achieve economies of scale, better technology development will be possible." He also emphasized, "This consortium formation will completely dispel doubts about how a small company like Edison Motors can acquire Ssangyong Motor."

SM Group plans to use some of the cash assets held by its 58 affiliates and funds raised through the initial public offering (IPO) of its core affiliate SM Line to acquire Ssangyong Motor. SM Group expects to create synergies with its automotive parts affiliates if it acquires Ssangyong Motor.

Inside and outside Ssangyong Motor and among creditors, while SM Group is recognized for its financial strength, its core businesses being construction and shipping have led to low scores regarding operational capability and synergy with Ssangyong Motor. An industry official said, "Although SM Group chairman Woo Oh-hyun recently denied it in an interview, suspicions remain that the acquisition bid was motivated by plans to develop the Ssangyong Motor Pyeongtaek plant site."

This content was produced with the assistance of AI translation services.