Suzuki to take 14.9 pct stake in new Daewoo Motor

HAMAMATSU, Japan, June 27 Reuters reported that Japan's top minivehicle maker, Suzuki Motor Corp, said on Thursday it would take a 14.9 percent stake in a new Daewoo Motor, helping it expand in Asia and share vehicle development costs.

Suzuki said it would pay $89 million for the holding, joining partner General Motors Corp in its efforts to rebuild the failed South Korean automaker, to be renamed GM Daewoo Auto and Technology.

"We had to make a quick decision about Daewoo. We figured we could iron out the details later," Suzuki Chairman Osamu Suzuki told a news conference.

Suzuki, which is 20 percent owned by GM, said in a statement it would look at sharing parts with GM and the new Daewoo as well as developing vehicles together.

"Korean cars are quite wonderful so it is not out of the question to see us share production technology. In fact it may be far superior to that of Japanese automakers," he said.

Suzuki and GM will market vehicles made by the new Daewoo and Suzuki will also consider using Daewoo's distribution network to sell Suzuki cars.

The venture will use the Daewoo brand in South Korea, Western Europe and Australia, but no decision has been made on other markets.

In April, GM agreed to capitalise the new company through a $251 million cash investment, giving it the largest stake of 42.1 percent, while its business partners would hold 24.9 percent.

Altogether, the investment by GM and its partners is expected to total $400 million.

Although the size of Suzuki's stake is larger than had been first expected, analysts have reacted positively, saying it would allow it to expand in Asia for a relatively small investment.

"It's small potatoes in terms of financial impact and an interesting opportunity for further growth," said Stephen Usher, auto analyst at JP Morgan.

"The efficiency and small car production capabilities that Suzuki already has can clearly help Daewoo strengthen its operations," he said.

ONE MORE PARTNER

Suzuki and Daewoo have worked together in the past with Suzuki supplying the South Korean automaker with parts in the early 1990s.

GM also said one more partner would invest in the new Daewoo.

Leading Chinese automaker Shanghai Automotive Industry Corp said this month it was in talks about joining GM's purchase of Daewoo assets. This would be the first time a major Chinese automaker has bought a stake in a foreign firm.

"It could well be another partner in Asia, but I cannot confirm it at this time," Frederick Henderson, President of GM Asia Pacific, said.

Fiat SpA, which joined GM in submitting a letter of interest in late 2000, was once expected to be the largest stakeholder after the U.S. automaker GM but is now seen out of the running.

Henderson also said he wanted Daewoo's market share to rise to 26 percent -- Daewoo's peak -- from 10 percent now over the medium term but declined to be more specific.

The new Daewoo will operate two plants in South Korea and a car factory in Vietnam. It will also take over eight sales units outside South Korea -- seven in Europe and one in Puerto Rico -- as well as a parts unit in the Netherlands