There's an old axiom that says good things come to those who wait.and alliance partner are about to test the theory. The partners are considering making a fresh bid on the assets of Korea's troubled Daewoo Motor.
This is the second time around forand the third for GM, whose 15-year partnership with Daewoo broke up in 1992. When Daewoo was crushed under some $18 billion in debt last year, GM made a unilateral offer rumored at $5.6 billion to buy the carmaker, which creditor banks promptly rejected, greedily hoping to get more from an international auction.
GM with Fiat bid on Daewoo again in June, but its $5 billion preliminary offer lost out to's $6.9 billion. Ford unexpectedly walked away from a final deal in September, leaving Daewoo creditors with egg on their face. With Ford out and DaimlerChrysler satisfied with its 10 percent of Motor, guess who still was waiting in the wings? But if creditors thought they had a captured audience, it wasn't for long.
When Uhm Rak-Young, governor of the Korean Development Bank, Daewoo's key creditor, began publicly discussing the many stringent conditions he planned to impose on potential suitors, GM officials said "Whoa."
Mr. Uhm said Daewoo Motor must be sold within a month, that any initial offers would be binding and that bidders would have to put down a sizeable cash deposit. Plus, he said, creditors now were willing to divvy up Daewoo so that several bidders might participate in the auction. Press reports out of Seoul made the sale of Daewoo to GM appear imminent.
The problem was Mr. Uhm had discussed none of this with GM. That's when GM threw down its own gauntlet in the form of a letter-of-intent stating that the GM/Fiat alliance was not legally bound to the deal should it decide not to follow through. Gone were the tight timeframe, the need for a cash deposit and the assertion that Daewoo would be split up.
Instead of binding GM/Fiat to inescapable action, the letter binds the creditors to accept conditions and rules of conduct, including a "gag order" stipulating that all parties make no public comment on proceedings until they reach finality.
With the creditors on board, GM/Fiat's real work begins and that's to figure out what has changed at Daewoo over the last three months. For starters, production has fallen, sales have been lost, research and development is stymied and salaried workers are going without pay. Whether or not Daewoo turns out to be a good fit, at long last GM officials are doing things their way. That alone seems worth the wait.