South Korean textile company, Ssangbangwool Group (SBW), is reportedly joining an estimated ₩1 trillion ($819 million) bid to buy the debt-ridden South Korean car manufacturer, SsangYong Motor Company, after its takeover deal with Edison Motors was recently called off.
SBW Group, majorly known for its underwear business, plans to turn in its letter of intent this week to EY Hanyoung, the accounting firm leading the sale, by forming a consortium led by affiliate Kanglim Co., Ltd., a heavy-duty vehicle and equipment maker.
Along with Kanglim, the group’s subsidiaries; including entertainment unit, IOK, and optical component producer, Nanos, are also expected to join the consortium.
The bid comes after a Kanglim-led consortium failed to acquire low-cost airline Eastar Jet, worth over ₩120 billion ($99 million), last year.
Industry experts believe that with its expertise in vehicle renovation business and investment in electric powertrains, Kanglim can create synergies with SsangYong if the takeover succeeds.
However, securing enough funds to pay back the carmaker’s debt, which stands at ₩700 billion ($576 million), as well as stabilizing its business operations for viable growth, will make Kanglim’s journey a difficult one.
While SBW’s seven affiliates saw total sales of ₩630 billion ($518 million) last year, SsangYong saw ₩1.2 trillion ($988 million) in sales in the same period.
An SBW Group official said that the group had already secured ₩120 billion in cash for the Eastar Jet acquisition and has also had an internal discussion about their funding capability, concluding that there is no issue regarding it.
SsangYong Motors, currently owned by Indian automobile maker Mahindra & Mahindra, was put up for sale in 2020, after which the Korean carmaker filed for court receivership and signed an MoU with EV maker Edison Motors in 2021.
However, Edison Motors failed to pay the initial ₩300 billion ($247 million) by the deadline, which was set on 25th March 2022, causing SsangYong to cancel the deal.