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GM, Fiat Considering Purchase of Daewoo

October 09, 2000|From Bloomberg News

SEOUL — General Motors Corp. and Fiat said Sunday that they will study the finances of Daewoo Motor Co. before deciding whether to buy the South Korean company's passenger-car unit and related assets.

The two companies expect the evaluation to be swift, and it may soon be followed by formal acquisition talks, GM said in a statement to Bloomberg News.

GM and Fiat emerged as the most likely buyers for Daewoo after a joint bid by DaimlerChrysler and Hyundai Motor Co. and a separate one by Ford Motor Co. were both withdrawn. Detroit-based GM is interested in Daewoo Motor to gain access to South Korea, Asia's second-largest auto market.

"GM has leverage right now, and it's using this to get the most advantage in terms of negotiating with the government and preventing other parties from coming in," said Mark Barclay, an auto analyst at Samsung Securities Co. in Seoul.

Earlier, South Korea's Financial Supervisory Commission, which is overseeing the sale of Daewoo by its creditors, backtracked from an announcement Sunday that GM submitted a letter of intent to buy Daewoo. In a statement, the FSC said talks with GM are in progress.

GM's interest comes after Daewoo's lenders said Friday they would allow the breakup of the company to attract buyers, after trying unsuccessfully for more than a year to sell the company as a whole.

Daewoo Group, formerly South Korea's second-largest industrial group, began unraveling in July 1999 with as much as $80 billion in debt. Though Ford made an initial bid of $7 billion in June, the Chosun Ilbo newspaper, citing unidentified auto industry officials, said GM reportedly would offer less than $896 million this time.

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