The main gate of Ssangyong Motor’s Pyeongtaek plant in Pyeongtaek-si, Gyeonggi-do. news
The failure of the Edison Motors consortium to acquire Ssangyong Motors has put a red light on Ssangyong Motor’s future recovery path. In particular, given that the legal approval deadline for Ssangyong Motor’s rehabilitation plan is only about six months, it is predicted that if realistically, it fails to find a new owner within one month, it will be difficult for a normal M&A to take place. As such, as the sale of Ssangyong Motor returns to its origins, the companies that participated in the acquisition in the past are also being re-evaluated.
According to industry sources on the 31st, the deadline for ‘mergers and acquisitions (M&A) before approval for rehabilitation plan’, which the court approved for Ssangyong Motor in April of last year, is October 15 of this year. By this time, Ssangyong Motor must hold a meeting with the new takeover candidate and finalize the approval of the rehabilitation plan. If it fails, Ssangyong Motor’s subsequent procedures, including ‘mergers and acquisitions after approval of the rehabilitation plan’ or ‘corporate liquidation’, which must be followed from then on, will be decided by the courts.
The problem is time. Previously, after Edison Motors issued a letter of intent to take over in July of last year, it took eight months to sign the main contract (last January), submit a rehabilitation plan (last February), and hold a meeting with stakeholders to approve the rehabilitation plan (April 1). This took An industry official said, “If the process such as adjustment of the acquisition amount and due diligence of the company experiences difficulties, the time may be further delayed.
SM Group is currently attracting the most attention as a candidate for acquisition. In the SM Group, which participated in the acquisition of Ssangyong Motor in the past, Namsun Aluminum, a subsidiary of SM Group, is mainly producing aluminum chassis products and automobile bumpers. It is evaluated that synergies can be expected from the acquisition of Ssangyong Motor. At the same time, the SsangBall Group has also entered the battle to acquire Ssangyong Motor, centering on Kwanglim, a special vehicle manufacturer within the group.
The stock market is also responding. According to the Korea Stock Exchange, the stock price of Namsun Aluminum, a subsidiary of SM Group, reached an upper limit of 3,475 won, up 29.91% from the previous trading day on the 28th, when Edison Motors’ acquisition of Ssangyong Motor was canceled. It closed at 4,320 won, up 2.37 percent. However, SM Group drew a line by stating, “In connection with the cancellation of the investment contract with Ssangyong Motor, the group and the company have never reconsidered whether to acquire Ssangyong Motor.”
If Ssangyong Motor fails to find a new owner, the court is highly likely to choose ‘mergers and acquisitions after approval of the rehabilitation plan’. M&A after the approval of the rehabilitation plan means minimizing the loss of a company through large-scale manpower restructuring before selling the company. For this reason, some are concerned that the situation at Ssangyong Motors in 2009, when union members of Ssangyong Motors went on a prison strike in protest against the management’s restructuring, could be repeated. However, the courts do not have a wide range of options as the burden of returning will be greater if Ssangyong Motor, which has about 100,000 jobs, is liquidated.
In the end, the industry says that KDB’s intervention is important to minimize side effects in the process of normalizing Ssangyong Motor. Earlier, KDB rejected Edison Motors’ loan request to finance the acquisition of Ssangyong Motors, and even now, KDB is keeping a distance, saying, “As the court leads the rehabilitation process, KDB is not officially involved in the sale process.” An industry official said, “It will be difficult to choose the liquidation of Ssangyong Motor, which causes mass unemployment from the beginning of the Yun Seok-yeol administration.
Kim Hyun-woo reporter 777hyunwoo@hankookilbo.com
