Mumbai, Nov. 23: Mahindra & Mahindra (M&M) today signed an agreement to acquire Ssangyong Motor Company for $463 million in new shares and corporate bonds.

The acquisition will result in M&M not only enhancing its presence in overseas markets but also pave the way for introducing Ssangyong’s sports utility vehicle (SUV) portfolio in India. Analysts said there were product complementarities between the two companies. M&M was chosen as the preferred bidder in August.

The two sides today announced the signing of a definitive agreement in Seoul. Under the agreement, M&M will acquire a 70 per cent stake in Ssangyong. The Calcutta-based PK Ruia group was also in the race to acquire Ssangyong.

The acquisition cost of $463 million includes $378 million that M&M will buy of new Ssangyong stock and $85 million of corporate bonds. The definitive agreement also lays out the terms related to the process of acquiring new stock and corporate bonds, down payment and deposit guidelines, repayment of rehabilitation claims, employment guarantees, and other covenants.

M&M has deposited 10 per cent of the final purchasing price under the terms of the agreement. The rest will be deposited three days prior to Ssangyong’s stakeholder meeting. It is expected that the corporate rehabilitation process is likely to be completed by March.

“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,” Yooil Lee, receiver of Ssangyong, said.

According to Pawan Goenka, president (automotive and farm equipment sectors), M&M, the acquisition will help to introduce a premium portfolio of SUVs in India and a growth avenue for Ssangyong.

Ssangyong has been undergoing a corporate rehabilitation exercise since February last year after suffering a severe cash shortage.