Ssangyong Motor and Edison Motors signed a major merger and acquisition (M&A) contract worth 34.8 billion won on the 11th.
According to Ssangyong Motor and related industries, on the 10th, the Seoul Rehabilitation Court approved the investment contract permission applied by Ssangyong Motor and Edison Motors. The initial deadline for signing the main contract was on the 27th of last month, but it was postponed once due to differences of opinion regarding the use of 50 billion won in operating funds paid by Edison Motors to Ssangyong and the sharing of technical data with Ssangyong Motors.
Ssangyong Motor said, “The timing of dispatch of the takeover planning team was adjusted to be after the approval of the rehabilitation plan, and the use of loan operating funds, which the Edison Motors consortium required prior approval, was arranged to be consulted in advance.” In order to improve product competitiveness of electric vehicles and internal combustion engine vehicles, the two companies will also sign a business agreement to strengthen cooperation between engineers.
Upon signing this contract, Edison Motors will pay a performance deposit of KRW 30.5 billion, which is 10% of the acquisition amount of KRW 34.8 billion. However, there are still many hurdles to overcome. The Ssangyong Motor rehabilitation plan must be submitted to the court by March 1. The balance of the acquisition funds to be paid thereafter is 274.3 billion won.
As Keystone PE recently left the Edison Motors consortium, private equity funds KCGI and Edison Motors have to prepare the remaining purchase price.
Despite the progress of Ssangyong Motor and Edison Motors’ M&A, the labor community remains suspicious of ‘eating’. The Ssangyong Automobile branch of the Metal Workers’ Union said, “Can we entrust the fate of Ssangyong to Edison Motors, which is becoming increasingly suspicious?” “They said they would not relocate the factory site, but the Korea Development Bank expressed reluctance to lend, so they brought up a real estate development case, and the future development prospect was unclear. Its ability to raise funds is also questionable.”
Deuk-joong Kim, head of Ssangyong’s car division, emphasized, “We have already experienced two hasty sales, and the damage has been passed on to the field workers.”
Oh Min-gyu, a researcher at the ‘Root’ of the Workers’ Movement Research Community, said, “The vehicle manufactured by Edison Motors is an electric bus, and the recently acquired Edison EV (Semicisco) produces an ultra-compact electric vehicle. It’s impossible, and we don’t have that level of technology.” Researcher Oh said, “Even if it asks for 300 billion won for the acquisition, it is doubtful where the 700 billion to 800 billion won of operating capital will come from.”
Edison Motors tried to get a loan from Korea Development Bank using the site of Ssangyong Motor’s Pyeongtaek plant as collateral to raise 700 billion won to 800 billion won in operating capital for Ssangyong Motors, but Korea Development Bank expressed disappointment. Recently, Edison EV’s stock price rose on expectations following the takeover of Ssangyong Motor, but there was a controversy after the investment association, the major shareholder, sold the stock. The Korea Exchange is investigating whether there have been any unfair trade practices in relation to the stock disposal of Edison EV’s largest shareholder.