France's Renault SA and India's top utility vehicle maker Mahindra are in the running to buy troubled South Korean SUV maker Ssangyong Motor, sources said on Friday, in a deal worth up to $500 million.
The participation of high profile international firms in the auction was seen as a potential threat to the dominance enjoyed by South Korea's top automaker Hyundai Motor and its affiliate Kia Motors, not only on their home turf but in export markets.
Seven foreign and South Korean companies have submitted letters of intent for Ssangyong, 10 percent owned by China's SAIC Motor Corp, by the Friday deadline, Ssangyong said.
Shares in Ssangyong jumped by their 15 percent daily limit on reports of the unexpectedly strong interest. The stock, with a market cap of 455 billion won ($372 million), closed up 13 percent in turnover 13 times the average over the past 30 days.
While the South Korea's smallest carmaker declined to identify bidders, sources said the Renault and its Japanese partner Nissan Motor Co (7201.T), along with India's Mahindra & Mahindra have joined the fray.
An industry source in Japan with knowledge of the situation told Reuters any interest would come from Renault-Nissan, rather than its Renault Samsung Korean unit, but a review of Ssangyong may turn up nothing of interest to the Franco-Japanese alliance.
Ssangyong has been in court-led restructuring since early 2009, hammered by one of the industry's worst downturns.
A Seoul court kicked off the sale process for the cash-strapped SUV maker this month, and is set to receive binding bids by July 20 to pick a preferred buyer during August.
Nissan and Ssangyong declined to comment, while a Renault spokeswoman in Paris said: "For legal reasons, we can't make any comment."
Asked about bidding plans, Mahindra President Pawan Goenka said: "We do not make any comments on future acquisition possibilities."
Samjong KPMG and Macquarie, which are handling the sale, declined to comment.
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