ACCOUNTS CIA-3
merger of Mahindra & ssangyong
Submitted by: Leandra Niharika Sindhu Akhil Thomas Aditi Paavana 1010013 1010015 1010018 1010019 1010023 1010039 1010074
MERGERS- meaning:
Mergers and acquisitions (abbreviated M&A) refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can aid, finance, or help an enterprise grow rapidly in its sector or location of origin or a new field or new location without creating a subsidiary, other child entity or using a joint venture.
MAHINDRA profile of the Company:
Mahindra embarked on its journey in 1945 by assembling the Willys Jeep in India and is now a US $7.1 billion Indian multinational. It employs over 1,00,000 people across the globe and enjoys a leadership position in utility vehicles, tractors and information technology, with a significant and growing presence in financial services, aerospace, after-market, real estate, hospitality, logistics. The Mahindra Group today is an embodiment of global excellence and enjoys a strong corporate brand image. Mahindra is the only Indian company among the top tractor brands in the world. It is today a fullrange player with a presence in almost every segment of the automobile industry, from twowheelers to UVs, SUVs and CVs. Mahindra has acquired a majority stake in REVA Electric Car Co Ltd. (now called Mahindra REVA), strengthening its position in the Electric Vehicles domain. The Mahindra Group expanded its IT portfolio when Tech Mahindra acquired Satyam Computer Services, now known as Mahindra Satyam. Its flagship company Mahindra & Mahindra Limited has recently earned the distinction of being the only Indian automobile manufacturer to feature in the top 10 list of the Carbon Disclosure Leadership Index in India, 2010, created by the Carbon Disclosure Project (CDP). CDP is an independent not-for-profit organization holding the largest database of primary corporate climate change information in the world.
SSANGYONG profile of the Company:
As a premier manufacturer of sports utility vehicles (SUV) and recreational vehicles (RV), SsangYong manufactures premium products in Korea. Founded in 1954, it has been manufacturing automobiles for more than five decades. In 1988, it developed a compact 4WD SUV, Korando Family, which was the first SUV manufactured in Korea. Since then it has established its reputation for innovation, leadership, and quality in the SUV field in Korea. Its next SUV the Musso was a great success in Korea and key export markets like Western Europe. In 1997, it launched a luxury passenger car, the Chairman. Since then it has launched a number of SUVs and a new luxurious version of the Chairman named Chairman W in 2008. Its latest SUV, a monocoque compact SUV, named Korando C was launched in export markets in October 2010. Ssangyong has a strong domestic network of over 130 dealers and exports to over 90 countries through over 1,200 dealers.
Merger of MAHINDRA and SSANGYONG: case study
On November 23, 2010, Ssangyong Motor Company Limited (SYMC) and Indias Mahindra & Mahindra Ltd. (M&M) its preferred bidder announced the signing of a definitive agreement in Seoul. The agreement which was signed by Mr. Yooil Lee and Mr. Youngtae Park, Joint Receivers of SYMC and Dr. Pawan Goenka, President, Automotive & Farm Equipment Sectors, M&M, in the presence of key staff and advisors to both groups. Ssangyong cars will be manufactured at the Mahindra plant at Chakan near Pune. A new assembly line will be installed to manufacture the Korean SUVs. The securing of a solid partner who has both financial capability and is engaged in diverse markets will allow Ssangyong to emerge as a global SUV player through the strengthening of R&D, investments in product development, better business competitiveness and global sales expansion. Together with its financial capability, Mahindra offers competence in sourcing and marketing strategy while Ssangyong has strong capabilities in technology. They are committed to leverage the combined synergies by investing in a new Ssangyong product portfolio to gain momentum in global markets. There is also an opportunity to introduce a premium portfolio of SUVs in the Indian market, providing a new growth avenue for Ssangyong and further strengthen M&M's dominant position in the SUV segment. SYMC is undergoing a corporate rehabilitation process since February 2009 and the court receivership will conclude upon court approval and the termination of corporate rehabilitation process. Mahindra has committed to nurturing the Ssangyong brand in global markets while preserving its Korean heritage. It is intended that SYMC will continue to function as an independent entity with primarily a Korean management. The acquisition will offer financial stability to SYMC and the two companies will work to further strengthen Ssangyongs product portfolio across the globe. The inherent strengths of Ssangyong combined with Mahindras expertise will help in building a global SUV major. The labour union of SYMC, M&M and SYMC have also signed a Tripartite Agreement which contains provisions for employment protection, long-term investment and commitment for no labor dispute.
MOTTO BEHIND MERGER:
The various purposes of merger of the two companies are: allow Ssangyong to emerge as a global SUV player allow Mahindra to take advantage of the sound technological background, R & D of Ssangyong.
new growth avenue for Ssangyong further strengthen M&M's dominant position in the SUV segment. Access to global markets
Deal in Monitory Terms:
Total cost of acquisition of US$ 463 million with US$ 378 million in new stocks and US$ 85 million in corporate bonds Exchange Rate Used: US $ I = KRW 1129 Mahindra will acquire 70% stake Deal expected to be concluded by March 2011 The widely-expected deal sent Ssangyong shares jumping briefly before falling 0.3% in a broader market down 0.83%. The news came as Hyundai Motor shares fell almost 4% on worries that deepening labour disputes could lead to major disruption at South Koreas largest automaker.
Benefit of the merger:
Pawan Goenka, president of Mahindras automotive and farm sector said the merger would help both companies expand in the global market. We believe that Ssangyong and Mahindra make powerful companies to create a global SUV brand
Effects of the Merger:
Mahindra To Launch SsangYong SUVs Next Year Mahindra & Ssangyong Working To Jointly Develop Vehicle Platforms Mahindra Ssangyong Rexton SUV Spied Testing Mahindra To Sell 120,000 SsangYong Cars This Year Across Globe Mahindra Planning Premium Car From SsangYong Folio Mahindra To Launch SsangYong SUVs Next Year Mahindra And SsangYong May Make Korandos Electric Variant
