A South Korean electric bus maker Edison Motors Co. added the activist fund Korea Corporate Government Improvement Fund (KCGI) as a financial investor (FI) to a consortium to buy Ssangyong Motor Co.
The partnership with KCGI is expected to help Edison secure enough funds in a race for the South Korean troubled sport utility vehicle (SUV) maker, 75% owned by India’s Mahindra and Mahindra Ltd.
Last month, Ssangyong has drawn nine preliminary bidders, including Edison, a US automobile distributor HAAH Automotive Holdings Inc. and a South Korean manufacturing- to shipping-focused SM Group.
Edison, which already joined hands with Seoul-based Keystone Private Equity, and KCGI on Aug. 9 agreed to form a consortium.
"The participation of the two FIs will completely resolve doubts about our ability to raise funds in the market," said Edison Chairman Kang Young-kwon said during an online press conference after signing a memorandum of understanding (MOU) with Keystone and KCGI.
The deal is estimated to cost about 1 trillion won ($873.3 million) since its buyer is required to take over the SUV maker's liabilities worth 600 billion won, including employees’ retirement pay.
TO TURN TO BLACK IN THREE TO FIVE YEARSEdison aims to develop Ssangyong into a global electric vehicle (EV) maker based on technologies for electric motors and batteries of the No. 1 electric bus supplier in Seoul.
"Edison Motors is a small company, but we secured excellent technologies for EV such as electronic control and autonomous driving while producing buses," Kang said. "We will do utmost to make Ssangyong turn to black in the next three to five years."
The bus maker aims to transform Ssangyong into a carmaker that sells more than 300,000 units a year, Kang pledged, adding its current difficulties are not from a lack of production facilities or technologies.
Edison, along with HAAH and SM Group, is touted as a strong candidate. HAAH,
which had sought to buy a 51% stake in Ssangyong for $250 million earlier this year, received a $50 million term sheet from a major investor for the acquisition, said its Chairman and Chief Executive Officer Duke Hale, according to media reports.
SM Group plans to use its own cash for the acquisition.
Write to Hyung-Kyu Kim and Jong-woo Kim at
khk@hankyung.comJongwoo Cheon edited this article.
