Ford Wins Right To Work With Daewoo
Thursday, June 29th 2000, 12:00 am
By: News On 6
SEOUL, South Korea (AP) â€” Ford Motor Co. on Thursday won a bidding contest to become the sole negotiating partner of debt-ridden Daewoo Motor Co., giving the American automaker a chance to expand its foothold in Asia's fast-growing market.
Ford's $6.9 billion bid surpassed offers submitted by General Motors Corp., which had formed an alliance with Fiat SpA of Italy, and another alliance between DaimlerChrysler AG and Hyundai Motor Co. of South Korea.
``Ford presented better proposals in terms of price, technology transfers, job security and contribution to the growth and development of the component industry,'' said Jang Sae-chan, a spokesman for the Corporate Restructuring Committee of Daewoo.
The U.S. carmaker welcomed the decision.
``Ford Motor Company is very pleased with its selection as the sole preferred bidder in the second-round negotiation process for Daewoo Motor,'' David Snyder, executive director of Asia-Pacific business division of Ford, said in a statement.
Ford declined to offer specific details of its bid, but Lee Yong-kun, head of the government's Financial Supervisory Commission, said the Dearborn, Mich.-based automaker offered $6.9 billion.
Lee declined to disclose details of other proposals. A Daewoo committee source, speaking on condition of anonymity, said the DaimlerChrysler-Hyundai bid was about $1 billion less than that of Ford.
GM-Fiat proposed between $4 billion and $5 billion, the source said.
The committee said negotiations with Ford would take about six weeks. If a deal with Ford fails, the committee then will negotiate with the next closest bidder â€” the DaimlerChrysler-Hyundai alliance, it said.
Ford had a 10 percent stake in South Korea's Kia Motors Corp. until it sold it to Hyundai in 1998 when Hyundai took over Kia. It currently has a 33.4 percent stake in Japan's Mazda Motor Co.
South Korea is one of the largest, but least open, auto markets in Asia. In 1999, only 2,401 foreign cars, or 0.25 percent, were sold in South Korea, while 1.65 million Korean cars were shipped abroad that year.
Analysts said the choice of Ford will boost foreign investor confidence in the South Korean economy, which is undergoing restructuring. Daewoo Motor's $18 billion debt has been a huge burden on South Korea's stretched financial institutions.
``This deal is very significant. It does send a message that restructuring is really taking place in South Korea,'' said Mark Barclay, an auto analyst at Samsung Securities Co.
The DaimlerChrysler-Hyundai bid was hampered by concern about a possible market monopoly, analysts said. Hyundai took over Kia Motors last year and both controlled 65.7 percent of the domestic market of 1.2 million vehicles in 1999. Daewoo's market share is estimated at 32 percent.
Daewoo has the capacity to make 2 million vehicles a year in plants stretching from the Philippines to Poland. But it borrowed heavily to expand, and cash flow from operations eventually fell short. Daewoo was also hurt by the Asian currency crisis that hit South Korea in late 1997.
Last year, Daewoo lost $3.9 billion on revenues of $5 billion. Creditors demanded a major overhaul, and a restructuring committee began seeking a buyer.