(adds background on GM-Daewoo deal)
By David Lawsky
BRUSSELS July 22 (Reuters) - General Motors won European Commission clearance on Tuesday for its purchase of 42.1 percent of bankrupt Daewoo Motor Co of South Korea for $251 million in cash.
"The Commission has found that the operation will have no anti-competitive impact, either in the manufacture and supply or in the wholesale and retail distribution of passenger cars and light commercial vehicles, given the number of other strong competitors in the European market, and has decided to clear the operation," the EU executive said in a statement.
GM agreed to a joint venture with Daewoo creditors in an effort to revive South Korea's third-largest selling auto maker.
The creditors will hold 33 percent and GM partner companies will take a 24.9 percent stake, GM said in a statement.
The deal was strongly backed by the Seoul government, which has pushed to attract foreign capital as it restructures conglomerates undone by the 1997/98 Asian financial crisis.
Daewoo had liabilities of 24.7 trillion won ($19.18 billion) at the end of March, compared to 7.9 trillion won in assets.
For GM, it brings a far larger foothold in one of Asia's biggest, fastest-growing but most insulated car markets. The country buys 1.4 million vehicles a year.
At the time the deal was signed in April, Frederick Henderson, the president of GM's Asia Pacific operations, told reporters: "You've got a great capability to enter Korea, you've got an outstanding technology base of precuts, and third, you've got a capability to serve not only the Korean market, but many markets around the world."
GM and its 49-percent-owned partner Isuzu Motors Ltd have a 3.9 percent share of the Asia Pacific market, and a goal of reaching 10 percent by 2004, he said.
The GM-Daewoo joint venture will operate two plants in South Korea and one in Vietnam. It also agreed to assume eight sales units overseas, including seven in Europe and one in Puerto Rico, and one parts unit in the Netherlands.
Together with a fourth unsold plant in Pusan, Daewoo had an annual domestic production capacity of about one million cars and 46,000 commercial vehicles.
In late June, Japanese minivehicle maker Suzuki Motor Corp agreed to take a capital state in the new firm. But that occurred after the transaction was filed with the Comission.
Suzuki said in a news release that a basic agreement was reached with General Motors. Altogether, the investment by GM and its partners is expected to total $400 million.