General Motors gets Daewoo Motor for US$400 million
General Motors gets Daewoo Motor for US$400 million
SEOUL (AFP): General Motors Corp. will buy bankrupt South Korean carmaker Daewoo Motor Co for just US$400 million under a deal signed Friday that ended a long-running takeover saga.
South Korean creditors said the deal was worth $2.0 billion but General Motors (GM) and its partners will only make a $400- million payment to get a 67 percent stake in a new firm to run Daewoo Motor.
Creditors will get the other 33 percent and receive $1.2 billion worth of preferred shares in the new firm, according to a General Motors statement.
The GM statement said the new firm will run only two of the three factories in South Korea and only operations in Vietnam and Egypt of the 12 overseas production facilities.
The memorandum was signed by GM and creditors, led by Korea Development Bank, at a special ceremony in Seoul on Friday morning. Rudi Schlais, GM's head of Asia-Pacific operations, said "this is a win-win. This is a very significant event."
A Seoul-based car industry analyst said: "It's a good deal for GM, a cherry picked by GM without any cash payment to the owners."
The deal ends nearly a year of uncertainty about Daewoo Motor's future after Ford withdrew a $6.9 billion bid in September last year.
The company then collapsed in November with an estimated $17.5 billion in liabilities.
The world's largest automaker teamed up with Fiat SpA of Italy to negotiate for Daewoo Motor. It made a formal offer in May.
A GM statement said the new firm would take over Daewoo Motor's plants at Changwon and Kunsan but not its main South Korean factory at Pupyong. GM had said in negotiations that Pupyong was too old and expressed fears over its militant union.
GM added: "The new company will also assume approximately $320 million of debt comprising existing borrowings at the overseas subsidiaries."
According to the US firm, the accord was non-binding and a final agreement was expected to be signed before the end of the year.
Richard Pyo, car analyst for CSFB in Seoul, said: "The government has removed one headache, it does not really matter what the price was, and it has positive implications on the overall market.
"The deal is in favor of GM. It is a little bit surprising that there is no upfront cash payment but it is not unexpected either.
"Creditors receive redeemable preferred shares, whose real value remains uncertain."
Meanwhile, hundreds of angry South Korean unionists hurled rocks and soil at riot police Friday, in protest at General Motors Corp.'s takeover of Daewoo Motor Co.
Scores of workers were detained after scuffles broke out in front of the central Seoul bank building where General Motors and Daewoo Motor creditors signed a memorandum of understanding on Friday morning.
About 200 Daewoo Motor workers continued holding their protest rally after the signing cerenomy by GM and KDB officials.