Two-Runner Race Taking Shape for Acquisition of SsangYong Motor

Edison Motors, an electric vehicle company seeking to acquire SsangYong Motor, has secured two PEF operators as financial investors (FI), easing concerns about its financing capability and forming a two-runner race with SM Group, another potential buyer of the troubled carmaker.

Edison Motors signed an MOU to form a consortium for the acquisition of SsangYong Motor with KCGI, Keystone Private Equity (PE), Semisysco, and TG Investment on Aug. 9.

Funds needed to acquire SsangYong Motor are estimated at between 800 billion won and one trillion won. Analysts predicted that Edison Motors, a small company that posted sales of 89.8 billion won and operating profit of 2.8 billion won last year, would have difficulty in raising funds for the acquisition.

KCGI and Keystone PE will provide half of the needed funds as financial investors. Semisysco and TG Investment will participate as strategic investors (SIs), which will engage in the operation of SsangYong Motor with Edison Motors.

As a result, SsangYong's acquisition race seems to become a two-runner race between the Edison Motors consortium and SM Group.

SM Group jumped into the acquisition race to many people’s surprise. Ranked 38th in the Korean business world, it is believed to have the upper hand in financing. Analysts say that SM Group will be able to raise enough funds through the IPO of its affiliate SM Line without receiving investment from the outside.

Nine candidates submitted letters of intent to take over the automaker. Together with Edison Motors and SM Group, Cardinal One Motors is regarded as a major candidate. This company is a Korean subsidiary of HAAH of the United States. But it has not cleared the market’s doubts about its funding capacity.