Ssangyong Motor Resale Begins... KG Group and Ssangbangwool in a Two-Way Battle

Published 10 Apr.2022 12:15(KST)

For Rapid Resale Using the 'Stalking Horse' Method

[Image source=Yonhap News]

[Asia Economy Reporter Kim Jin-ho] Ssangyong Motor is set to officially begin the resale process as early as this week. Since the merger and acquisition (M&A) with Edison Motors fell through, the company plans to find a new owner quickly through a swift sale method.

According to industry sources on the 10th, Ssangyong Motor and the lead sales agent EY Han Young Accounting Firm have internally decided to proceed with the sale using the "Stalking Horse" method. The Stalking Horse method involves selecting a prospective buyer in advance and then conducting a separate public competitive bidding process, granting the prospective buyer the right to purchase if the bidding fails.

Ssangyong Motor's choice of the Stalking Horse method is analyzed to be due to the stability and urgency of the sales process. It is also known that the court felt burdened by a non-competitive private contract.

The acquisition candidates expected to participate and compete in the Stalking Horse process are KG Group and Ssangbangwool Group. KG Group is evaluated to be somewhat ahead in terms of financial strength. KG Group originated from Gyeonggi Chemical (now KG Chemical), Korea's first fertilizer company, and has grown by acquiring companies such as Inicis, KFC Korea, and Dongbu Steel (now KG Steel).

Ssangbangwool Group has formed a consortium centered on its special-purpose vehicle manufacturing affiliate, Kwanglim, to acquire Ssangyong Motor. However, considering the group's sales scale and recent consecutive losses, it is assessed to have somewhat less financial strength than KG Group. There is also analysis that even if the acquisition succeeds, the group may not be able to bear the enormous funds required for the future normalization process.

Meanwhile, some concerns have been raised that certain companies entering the acquisition battle during this resale process are more interested in the "profits" than in the normalization of Ssangyong Motor. It is claimed that they aim to gain more profit through real estate development of the Ssangyong Motor Pyeongtaek plant site than from the acquisition price.

Ssangyong Motor signed a business agreement with Pyeongtaek City last year regarding the "Ssangyong Motor Pyeongtaek Plant Relocation and Development Project" to sell the Pyeongtaek plant and relocate to a new location. The Pyeongtaek plant site was valued at about 900 billion KRW, and if its use is changed to residential land, its value is estimated to exceed 1 trillion KRW.