SEOUL – After nearly two years of negotiations, the much-anticipated acquisition of Daewoo Motor Co. Ltd. by General Motors Corp. is headed for the finish line.

Insiders familiar with the negotiations are extremely positive that a definitive agreement will be finalized in April.

There is anecdotal evidence, as well. A highly placed source within the South Korean automotive industry tells Ward’s that within the last few weeks a number of GM officials have joined the exclusive Seoul Club, a high-priced Korean business club whose membership includes all senior automotive executives in Korea.

Entry into the Seoul Club entails a steep initiation fee and at least one year’s membership dues. “With a lot of GM members joining this exclusive club, one has to draw the conclusion that they are all here in Korea to stay,” the source says.

And a source on the GM side confirms several GM people are seeking permanent housing in Korea. GM executive Nick Reilly, who heads the transition team and is the president-designate for the new GM-Daewoo entity to be formed, has just moved into a large villa.

A Daewoo source, meanwhile, says the deal has come down to the acquisition of Daewoo’s passenger car plants in Kunsan and Changwon, plus the Daewoo Technical Center at Bupyeong, and 10 overseas facilities, including nine sales companies in Western Europe and an assembly operation in Vietnam.

While Daewoo’s plant in Vietnam is a simple operation that assembles knocked-down vehicles shipped from Korea, it will give GM a foothold in that market. “Essentially, GM will be getting the Vietnam operations for free and there is virtually no risk involved, so why not include it?” the source says.

Daewoo’s operations in Egypt were included in an earlier memorandum of understanding, but that subsidiary has been excluded because of various liabilities uncovered during GM’s in-depth due diligence.

There was further discussion of including Daewoo’s India operations in the deal, the source says, but it looks like India is going to be excluded. The reason has to do with the current shareholder structure, which would not permit GM to make a clear-cut acquisition of the India assets.

Many other sales operations included in the earlier MOU also were excluded because of various tax liabilities. The source says that, in some cases, GM’s superior accounting methods showed that the tax liability was as much as 1,000 times greater than that which showed on Daewoo’s books.

There was no attempt at deception, he says, only that the accounting methods used by Daewoo are inferior to GM’s and greatly understated the liability. GM, of course, would have to reflect the true liability on it books and this made many of the overseas sales operations extremely burdened and unsatisfactory investments.

Sources say although the asset base GM now hopes to acquire has been greatly reduced by the numerous exclusions, the price GM is offering will not be substantially less than that offered in the earlier MOU – which was said to be around $400 million.

“If GM attempts to revise its pricing too much, the Korean side simply is not going to accept it,” one source says. “GM is going to have to develop (a) very creative pricing structure to make the deal work.”

Regarding issues with the Daewoo union, the collective bargaining agreement still poses a hurdle, but a source notes that both sides think it is not an insurmountable one. Essentially, the agreement gives Daewoo workers a strong voice in any company restructuring plans and also guarantees jobs.

“My understanding is that once the definitive agreement is signed, the labor matter will be addressed by both sides and that both sides anticipate the union will acquiesce and let the deal go through,” a Daewoo source says.

All of this optimism from negotiators on both sides notwithstanding, there is a great deal of outside skepticism regarding the deal. Some major foreign and domestic investors have opined that GM is purposefully trying to alter the offer to a degree that will be unacceptable to Daewoo’s creditor banks, so that GM can step away from the deal with its reputation still intact.

But a source close to the negotiations vehemently denies this.

“GM definitely wants this deal to go through and has not invested all of the resources we have seen utilized to date without the strong and clear goal of acquiring Daewoo Motor’s viable assets,” he says. “The GM people are here in force; they are anchoring themselves into the business community and they are here to stay.”

Another source familiar with the negotiations from GM’s side also scoffed at suggestions that GM might try to “spill the deal.”

“That’s absolutely absurd,” the source says. “GM is going to make the deal, and early to mid-April looks good.” Both president-designate Reilly and Frederick A. (Fritz) Henderson, president-GM Asia/Pacific, also are on record as saying the deal will be signed before the end of April.

Other sources confirm that GM’s lawyers at the Korean law firm of Kim and Chang are working on language for the agreement, as are many GM staff lawyers now in Korea from their Asia/Pacific bases in Singapore and elsewhere. “GM’s consultants and advisors are fully engaged in completing all legal aspects and in getting the agreement language in order,” one source says. “They are all fully engaged in the deal.”

The only foreseeable stumbling block in the process, sources say, is labor. “The deal will be written with union cooperation as a condition,” a source says. “If the unions do not budge, then ultimately there would be no deal.” Contrary to news reports, Ward’s is told GM has not been negotiating with Daewoo’s unions. “The negotiations taking place are strictly between Daewoo management and the unions,” a source says. “GM is a potential suitor for the business but not an owner, and is not a part to those negotiations.”

Sources say that if the deal is successfully completed, a major priority will be bringing both sides together so that everybody is working “on the same wave length.”

Those close to the negotiations agree that GM has a long road ahead to integrate two different cultures and two different companies into one new company. Says one insider: “Basically, experts from both Daewoo and GM will be engaged in every major operation.”