Mahindra and Mahindra is likely to accept HAAH Automotive’s bid for $258 million for SsangYong Motor Company, according to sources at CNBC TV18. SsangYong has short-term debt of $336 million and HAAH has reportedly sought delay of debt repayment to creditors. Mahindra had purchased a 70 per cent stake in SsangYong in 2013 for $463 million, but recently floated the idea of reducing its stake in SsangYong.
HAAH automotive is an automobile retailer with over 1,000 outlets in the US. It has a technical partnership with China’ss Chery automobile. The company is also a retailer for Chery’s cars in the US market. This also means that Chery could make an investment in SsangYong by supporting HAAH Automotive.
In June, Mahindra was planning to give up control of struggling South Korean unit SsangYong Moto after reporting a consolidated net loss of 19.55 billion rupees ($258 million), compared with a net profit a year ago, as it booked a writedown on its investment in SsangYong and other international units.
Mahindra, which owns a 75% stake in SsangYong, rescued the sport-utility vehicle (SUV) maker from near-insolvency in 2010 but has struggled to revive its fortunes. The company said in April it would not invest further in SsangYong.
Mahindra, which entered into a joint venture with U.S. automaker Ford Motor last year, said the pandemic had delayed the completion of merger formalities between the two companies but they continued to work together under the new alliance.
Mahindra had earlier stated that where there was no clear path to profitability it would look for a partnership or close down those businesses, but in those that can clearly generate equity returns of 18% or those that are of strategic importance.