Mahindra named preferred bidder for Ssangyong stake

SEOUL (Bloomberg) -- Mahindra & Mahindra Ltd., India’s biggest maker of SUVs, is the preferred bidder for a controlling stake in Ssangyong Motor Co., the South Korean automaker said Thusday.Ssangyong, operating under bankruptcy protection, plans to sign a preliminary agreement with Mahindra by the end of August and aims to sign a contract for the sale in November, it said in a statement to the Korea Exchange. The company will begin talks with Indian rolling stock maker Raghav Industries Ltd. if negotiations with Mahindra fail, according to the statement, which didn’t disclose how much the Mumbai-based company offered for the shares.Obtaining control of Pyeongtaek, South Korea-based Ssangyong may add to Mahindra’s expertise in building SUVs in the world’s second-most populous nation. The purchase may also provide access to markets including Russia, where Ssangyong exports vehicles, said Lee Jin Sik, an auto-industry analyst at consulting firm CSM Worldwide.Ssangyong’s stock fell as much as 11 percent to 11,500 won in Seoul, the lowest since May 28,and changed hands for 11,750 won as of 9:15 a.m. The benchmark Kospi stock index dropped 1.1 percent.The automaker, formerly controlled by China’s SAIC Motor Corp. sought bankruptcy protection early last year after higher oil prices and the global recession squeezed sales of its mainstay SUVs, resulting in a cash shortage.The company sold 43,881 vehicles including 26,190 exports in the first seven months of this year, compared with 13,091 a year earlier, when the carmaker’s production was disrupted for 77 days as workers opposed to job cuts staged a sit-in.