SEOUL -- Shanghai Automotive Industry Corp. (SAIC), the joint venture partner in China of both General Motors and Volkswagen AG, signed late Thursday a final agreement to acquire South Korea's fourth largest SUV automaker, Ssangyong Motor Co., for about $500 million.
"The takeover of Ssangyong will help Shanghai Automotive to achieve its goal of global strategy," said Hu Maoyuan, president of Shanghai Automotive, at the signing ceremony at a hotel in Seoul. "Shanghai's passenger cars and Ssangyong's SUVs will help each other a lot."
Noting that the takeover is a "win-win" strategy benefiting both Ssangyong and Shanghai, he said Ssangyong vehicles, mostly SUVs, will be sold in China through Shanghai's current sales network.
Currently, Ssangyong is selling its Chairman sedan and Rexton in China, but Maoyuan said he will seek to sell more Ssangyong vehicles in other countries under its "global market strategy."
Officials said SAIC has agreed to buy a controlling 48.9 percent stake in Ssangyong for 10,000 won ($8.88) a share from Ssangyong's creditors.
Industry watchers said SAIC's buyout could help Ssangyong build a bridgehead into China's rapidly growing vast market, but also raises concerns that transferring Ssangyong's technology to a Chinese firm could backfire if China floods Korea with cheaper models.
The signing came three months after SAIC was selected in July as the preferred bidder for a 48.9 percent stake in Ssangyong, which had been up for sale since creditors bailed it out following South Korea's 1997-98 financial crisis.
SAIC President Hu Maoyuan and other Chinese officials have been in Korea this week, visiting Ssangyong's Pyongtaek plant and engine plant in Changwon as well as the automaker's research and development facilities, according to Ssangyong.