Korean Car Makers Scramble for a Deal
3 May 2000
The Korean Herald reported several new developments in the on-going struggle by Daewoo to find connubial bliss. The story states that Hyundai Motor, General Motors and Ford Motor are entering into the second round of their heated three-way battle for the control of the ailing Daewoo Motor this week. While a Hyundai Motor-DaimlerChrysler strategic alliance appears imminent, top GM and Ford executive are planning on holding separate meetings with the Korean media to reiterate their strong will to buy Daewoo Motor. According to government sources cited in the article, Hyundai and the German-U.S. conglomerate are now involved in serious talks over equity participation or technological tie-up. A possible alliance with DaimlerChrysler is expected to sharply boost Hyundai's bid for Daewoo, as it will help dissipate negative views about foreign and domestic takeover of the ailing automaker, analysts say. In addition, Renault's recent acquisition of Samsung Motors is expected to exert beneficial effects by strengthening Hyundai's effort to fight back monopoly concerns in its bidding for Daewoo Motor. In a video press conference, GM President Rick Wagoner explained his company's strong will to buy Daewoo and pledged to retain Daewoo's workers, facilities and parts suppliers. Wagoner stressed that GM is the most qualified and ideal candidate to take over Daewoo, noting the two firms' tie-up of the past. Rudy Schlais, president of GM Asia-Pacific, stated that GM is committed to keeping Daewoo a Korean company even after the acquisition. Ford Motor expects to send Vice Chairman Wayne Booker and Asia-Pacific director Paul Drenko to Seoul this week for an official news conference. Booker, who had handled Ford's takeover bid of Kia Motors in 1998, will examine progress in its Daewoo bid and explain Ford's post-acquisition plans to the Korean government and creditors during his Seoul visit. The Korean visits by top GM and Ford executives are also timed for Wednesday's opening of the "2000 Korea Import Motor Show" in Seoul. "Until recently, Hyundai's chances in the Daewoo bidding were seen as rapidly waning, with government officials publicly expressing a desire to sell off Daewoo to a foreign company for concerns over a monopoly and competitiveness," an industry analyst said. "But the prospects for the Daewoo bidding are becoming increasingly unpredictable, particularly because of the negative public and labor attitudes towards foreign acquisition." Representing the voices of opposition, Prof. Euh Yoon-dae of Korea University said in a newspaper column that Daewoo Motor should not necessarily be sold off to a foreign company, particularly in consideration of Hyundai Motor's weight in the global auto industry. "Hyundai Motor is surely a giant in Korea. On the international scale, however, the No. 1 Korean carmaker is dwarfed by General Motors, Toyota and other majors." DaimlerChrysler recently acquired a controlling 34.4 percent in Mitsubishi Motor, which currently holds a 4.02 percent stake in Hyundai Motor. Meanwhile, Daewoo Motor America reported that its April 2000 sales were 265% ahead of its April 1999 figures.