Edison Who Couldn't Swallow the Whale... Ssangyong Motor Seeks New Owner Again (Comprehensive)

Funding Failure Leads to Collapse
"Plan to Resell After Increasing Value"
Industry Outlook Remains Pessimistic

[Asia Economy Reporter Yoo Hyun-seok] Edison Motors Consortium's acquisition of Ssangyong Motor has ultimately fallen through. The miraculous merger and acquisition (M&A) where a shrimp embraces a whale did not occur. The failure to secure funding, which raised many doubts from the start of the acquisition battle, became the cause of the collapse. Although the company plans to proceed with a resale process, there are forecasts that finding a new owner will not be easy, as major companies did not participate in the final bidding during past acquisition procedures.

On the 28th, Ssangyong Motor announced that it would terminate the M&A investment contract with Edison Motors Consortium. The contract was automatically canceled because Edison Motors failed to pay the acquisition price within the deadline.

Previously, the Edison Consortium was required to pay the remaining 274.3 billion KRW, excluding the 30.5 billion KRW deposit paid by the 25th of this month. This is because the scheduled meeting of stakeholders is on the 1st of next month, and the full acquisition payment must be made at least five business days before the meeting date.

Throughout the acquisition process, there were continuous conflicts between Ssangyong Motor and Edison Motors. The trade creditor group, composed of Ssangyong Motor’s partner companies, requested the court to replace the acquirer because the repayment rate proposed by Edison Motors was excessively low. The labor union also submitted an opposition to the court, stating that the repayment rate proposed by Edison Motors was too low and that their technological capability could not be trusted.

From the market’s perspective, doubts about Edison Consortium’s funding ability have been raised since before the acquisition began. The Edison Consortium planned to secure acquisition funds by attracting financial investors (FI). However, Keystone PE, initially an FI, withdrew from the consortium, and although KCGI did not officially announce its withdrawal, the plan faltered as it did not finalize investment methods such as securing Ssangyong Motor shares or lending funds.

Ssangyong Motor intends to seek a new acquirer and proceed with resale. The company emphasized that its condition has improved since the start of last year’s M&A and expressed confidence in the resale. The development of the successor model to the Musso, the ‘J100,’ which was uncertain, has been completed and is scheduled for release at the end of June. The semi-knocked down (CKD) project with Saudi Arabia’s SNAM also saw the local factory break ground in January. They secured an export volume of 30,000 units annually starting in 2023. A company official explained, "There are still about 13,000 units that have not been shipped yet," adding, "If supply issues for parts such as semiconductors are resolved, the production line is expected to operate in two shifts, normalizing company operations."

The creditor group also expressed a willingness to quickly find a new acquirer. A creditor group official said, "We plan to find an acquirer with financial strength and technological capability after further increasing the company's value."

However, industry outlook on the resale is pessimistic. During last year’s Ssangyong Motor sale process, groups like SM Group emerged as potential acquirers but ultimately did not participate in the final bidding. If this happens again, the court may terminate the rehabilitation process and proceed with liquidation.

Experts predict that the failure of Ssangyong Motor’s acquisition will become a significant burden for the new government. Lee Hang-gu, senior researcher at the Korea Automotive Research Institute, said, "The previous government made every effort but ultimately failed," adding, "This will likely be the first test for the next government’s industrial policy and is not an easy problem to solve."

Professor Kim Pil-su of Daelim University’s Department of Automotive Engineering also expressed concern, saying, "There is no reason to acquire Ssangyong Motor, which lacks future growth engines," and "This can be seen as the biggest bomb the new government has inherited."

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