Done Deal

SEOUL — Two years ago, General Motors Corp. offered an initial bid of nearly $5 billion to acquire Daewoo Motor Co. Ltd. in a global auction process. In Late April GM reached final agreement with Daewoo on selected assets of the insolvent Korean auto maker for a mere $251 million.

That investment will give GM 42% of the assets being acquired and provide solid control of a new company to be formed. Unnamed alliance partners will pay another $150 million for a 25% stake.

Under the deal, the GM-led new company — GM Daewoo Auto and Technology Co. — will acquire Daewoo's highly productive assembly plants in Kunsan and Changwon, Korea, plus eight overseas sales subsidiaries and one assembly plant in Hanoi, Vietnam.

In an exclusive interview with WAW, Frederick A. (Fritz) Henderson, GM's newly appointed president of GM Asia/Pacific, talks about details of the Daewoo deal. The following is an edited version of the wide-ranging Q&A session.

WAW: What are your market-share targets for Korea?

HENDERSON: I believe we'll achieve them first and then let you know what they were and how we did it. Daewoo has had a lot of trouble and we need to get back our footing as soon as possible, but we'll work on both.

WAW: Will you bring American platforms to Korea? Will you assemble cars in Korea that were developed in America or other markets?

HENDERSON: It's really too early to say whether we'll assemble U.S. vehicles here. I can say, though, that we feel quite strongly that what's designed here will constitute the bulk of what we produce here. We will have multiple shareholders and we need the ability to go shopping in our own large global shopping market, of course, but one of the principal reasons for doing this deal is to acquire Daewoo's product development capability.

WAW: Will you utilize the Daewoo Technical Center in Bupyeong?

HENDERSON: The technical center is staffed and operating and will continue to work on developing new products. We feel we have a very strong group of people there, and we'll be able to hit the ground running.

WAW: There has been mention of your using GM's Japanese partners to develop products for the Korean or wider Asian markets. Do you intend to do this?

HENDERSON: I wouldn't anticipate that we would develop any vehicle for Korea in Japan, but I wouldn't rule out anything.

WAW: What are some of the first steps you will take? Have you developed a comprehensive strategy for Korea?

HENDERSON: Most of our effort has been devoted to getting the deal put together. Now we can focus on the hard work and the fun work — what we need to do to be successful as a new company.

WAW: You have excluded several of Daewoo's overseas car assembly operations from the deal. Yet, many of these are dependent on Daewoo for parts, and in some cases, for partially or wholly knocked-down vehicles. What's going to happen to those companies?

HENDERSON: That was Daewoo's strategy, to supply the overseas subsidiaries with vehicles and parts. We'll continue to supply those overseas operations for a certain period of time as part of the transition.

WAW: What are your plans for marketing Daewoo cars in North America?

HENDERSON: We decided not to acquire Daewoo's operations in the U.S. and Canada based on the results of our due-diligence, the state of the business there, the state of the brands and the long-term outlook for those operations. We have an objective for bringing the Daewoo product to North America, but we're still evaluating the options. There is no anticipation that we will bring cars to North America under the Daewoo brand.

WAW: Might you export the highly successful Daewoo Matiz to North America?

HENDERSON: The Matiz is a great value in many other markets, but I'm not sure about the U.S. It may be a little small for the U.S.

WAW: What about the operations of GM Korea? What's going to happen to your efforts to establish a toehold in Korea for Cadillacs and Saabs?

HENDERSON: We'll continue to import niche models to Korea. We'll also operate the new company. I can't foresee at all any competition arising between these two channels.

WAW: How much has GM invested in getting ready for this deal?

HENDERSON: I don't have a figure for you today. But the investment for preparing for the acquisition has not been small. We have hired attorneys, accountants and consultants; sent due-diligence teams around the world. It is a large amount. It demonstrates a very substantial commitment to make this deal work. It's nice to be able to reach an agreement.