Is bankrupt Saab as good a buy as Ssangyong for Mahindra?

Mahindra and Mahindra is among the four companies that has shown interest in bankrupt Swedish automaker Saab. According to a Times of India report Mahindra and Mahindra has signed a confidentiality agreement with the bankrupt company and is in the process of finalizing its bid.

Sources told Times of India that M&M is likely to tie up its bid in the next 15 days and Kotak Mahindra is also likely to be a part the Saab deal. Reportedly the top brass of M&M Auto and its mergers and acquisition team will meet later this week and take a final call on the structure of the bid.

 Is bankrupt Saab as good a buy as Ssangyong for Mahindra?

Reuters

Pawan Goenka, president of the automotive business at Mahindra & Mahindra tells CNBC-TV 18 that they may be looking to acquire SAAB's assets because of the R&D and tech benefits that they can derive from it.

"SAAB can bring in some technologies that go into SUVs, it can bring in infrastructure for R&D and it also brings in the global distribution network, but we will see if this is sufficient for us to be interested," he told CNBC TV 18.

That M&M's weakness lies in research and development is clear from its acquisitions in the last four to five years. Mahindra, which is on a hyper M&M drive, bought troubled Korean sports utility vehicle manufacturer Ssangyong in 2010 as well the Italian designer brand Engines Engineering. Previously it took over Kinetic, a two-wheeler company and now media reports say it is even eyeing Italian motorcycle maker Ducati.

While Ssangyong is a good fit in the technical department for the SUV business, Saab can give M&M an established brand, a manufacturing hub in Europe as well as a technical centre. But now that Saab is bankrupt, shouldn't Mahindra do a complete due diligence before jumping in to buy yet another foreign asset? Moreover, Mahindra may not be able to purchase a Saab license agreement from General Motors Co, which it's seeking as part of the deal.

SAAB filed for bankruptcy back in December last year. Since then the management and board members of SAAB are looking for a prospective buyer who will buy 100 percent of SAAB.

Watch the full interview on CNBC TV 18 :

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Updated Date: Dec 20, 2014 06:33:31 IST