Business

Mahindra closes in on South Korean carmaker Ssangyong

Ssangyong demonstration
Image caption Riot police were deployed at Ssangyong's car plant to break up a sit-in by workers

Indian carmaker Mahindra and Mahindra has signed a preliminary deal to take over bankrupt South Korean rival Ssangyong Motor.

Monday's announcement did not disclose details of Mahindra's investment, although analysts estimated that a 50% stake would cost about $418m (£268m).

Other carmakers, including France's Renault, looked at Ssangyong, which makes sports utility vehicles (SUVs).

Mahindra has been after SUV technology as part of its global expansion plans.

Ssangyong said in a statement: "We give the takeover candidate [Mahindra and Mahindra] an exclusive right for negotiation and won't be involved in any takeover-related activities with a third party."

Ssangyong was given court protection in February 2009. Rising oil prices and recession had hit demand for SUVs.

Chinese parent company Shanghai Automotive Industry Corp had refused to inject more money into Ssangyong, sparking weeks of violent protests.

Should Mahindra complete the deal, it would be the second Indian carmaker to enter the South Korean market, after Tata Motors' acquisition of truck maker Daewoo Commercial in 2004.

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