SEOUL--Motor Co. today sped past international competitors to be named the sole bidder for the insolvent Daewoo Motor Co. Ltd. Sources here say Ford bid $6.9 billion, besting archrival Corp.'s initial offer of $6 billion last May. GM's bid this time is said to have been between $4.2 billion and $5 billion.
A spokesman for the committee representing Daewoo Motor's creditors said at a news conference thatoffered better capabilities "to improve the corporate value of Daewoo Motor, a willingness to transfer technology, provide job security and contribute to the growth and development of components industry."
Ford's bid also includes an option to give Daewoo employees an ownership stake in the automaker, which insiders say, was a key consideration of the committee, which has been under pressure from Daewoo unions and suppliers to nationalize the automaker to protect jobs.
This is the second time Ford has participated in an international bid for a Korean car company. The automaker made an unsuccessful bid to buy insolvent Kia Motors Corp. in 1998.Motor Co. Ltd., a rival in the Daewoo bidding, won control of Kia.
Ford's selection this time is a bitter loss for GM, which offered a joint bid for Daewoo with recent partnerSpA of Italy. GM had hoped to use Daewoo's manufacturing capacity of 2 million vehicles as a base for exports to Southeast Asia in order to reach its goal of 10% market penetration of the region. Alan Perriton, director of acquisitions and alliances for Asia/Pacific and the lead negotiator on the Daewoo project, says that GM has been pursuing Daewoo Motor for at least two years. He says he was “surprised and very disappointed” to receive a telephone call advising that his company was out of the bidding.
“We were very surprised, because this was so unexpected and we had made a very fair offer,” Mr. Perriton says. “The proposal we submitted was based on the best available knowledge in the world of Daewoo, its people and its processes. Our price was what we believe to be the real fair market price.” Mr. Perriton says GM offered somewhat higher than the $4.2 billion figure leaked to reporters by a government insider. “The fact that the committee went with Ford alone was equally surprising,” Mr. Perriton adds. “It makes one wonder about the procedures they used.”
The No.1 U.S. automaker left its own bitter taste here when its 15-year-old joint venture with Daewoo collapsed in 1992. Nevertheless, GM until last fall had been in exclusive talks with Daewoo creditors. When negotiations failed, creditors decided to open the doors to other interested bidders, rather than declare bankruptcy, in order to turn company assets into cash
Motor and DaimlerChrysler AG, which announced their own alliance June 26, in which DC paid $428 million for a 10% stake of the Korea's No.1 carmaker, reportedly set their bid for Daewoo Motor at around $6 billion. If they acquired the Ssangyong Motor subsidiary as well, the bid price was to be upped to $7 billion. Hyundai already holds a 75% share of the Korean car market, but was hoping to position itself against a foreign competitor.
"That's business," a Hyundai spokesman says. "Sometimes you win and sometimes you lose. We're disappointed, of course. " DC made no secret that it was lukewarm on winning Daewoo, and is focused more on a 50-50 commercial vehicle venture with Hyundai.
David Snyder, Ford's executive director Asia/Pacific new business development, says Daewoo Motor is an excellent global fit with Ford and gives it access to the Korean market, in which the company virtually has no sales. He says the opportunity for sharing design, parts, technology and sales distribution networks is excellent. He stressed that the main mission of Ford would be to restore and grow Daewoo Motor.
Hogen Oh, executive chairman of the Daewoo restructuring committee, says Ford can lower its final bid as long as it can justify the move and so long as the new bid isn't a major reduction. "We hope and pray that it will not be a major adjustment," he adds. "If it is, then we have a problem."
As Ford now works on a more intense due diligence, Oh says he will help the automaker meet the restructuring committee's six-week completion target. Daewoo Motor, he says, has US$14 billion to US$15 billion in unpaid debts. Last year, when GM unilaterally sought to acquire Daewoo Motor, news media and analysts here said: "Daewoo was in a casket but not quite dead." Says Oh: "Now everyone wants a piece of the Daewoo Group."