Indian firms Mahindra & Mahindra, Coal India Seek to Go Abroad

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Nov. 24 – As recent news is focused on Chinese companies gobbling up foreign firms and assets, two Indian firms, Mahindra & Mahindra and Coal India have also been on the lookout for lucrative assets and market access in faraway places.

Today saw the signing of a definite agreement by Mahindra & Mahindra, a leading company in India’s sports utility vehicles sector, to purchase Korean automaker SsangYong Motor Company (SYMC) for US$463 million.

The Korean automaker, after years of poor sales, recently filed for bankruptcy protection. The new influx of fresh capital from the Indian firm should rejuvenate the company.

Under the deal, M&M will subscribe to new shares of SYMC worth US$378 million and will acquire corporate bonds worth US$85 million, according to a media release in South Korea.

“The coming together of Mahindra and SsangYong will result in a competitive global UV (utility vehicle) player. Together with its financial capability, M&M offers competence in sourcing and marketing strategy, while SsangYong has strong capabilities in technology,” Pawan Goenka, president of M&M’s automotive and farm equipment sectors, was quoted as saying.

Earlier this week, Coal India also signaled that it might make a takeover bid for U.S.-owned Massey Energy Company, the fourth largest U.S. coal extractor by revenue. New York-listed Massey Energy, which in 2009 produced 36.7 million tons of coal, has a market capitalization of US$5.16 billion at its Monday closing price of US$50.52 a share. Its net income in 2009 was US$104.4 million on revenue of US$2.3 billion.

“It’s going to be expensive, but the cost of not acquiring it, too, could be huge,” Partha S. Bhattacharyya, chairman of Coal India, said. In addition, the company is also close to finishing a transaction with Peabody Energy Corp, another U.S.-owned coal mining company, for jointly operating a mine in Australia.

The deal, which passed the preliminary checks of due diligence, would give Coal India a large stake in the mine, and could be priced at a hefty US$200 million.