GM says it is close to deal to acquire Daewoo Motor

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Posted 8:04AM on Tuesday, March 19, 2002

SEOUL, South Korea - General Motors Corp. said Tuesday that it expect to wrap up takeover talks with Daewoo Motor Co. in a matter of weeks. The American auto giant signed a preliminary deal in September to take over the heavily indebted South Korean firm for about $1.2 billion and hoped that a final deal would be signed by year's end. But negotiations foundered over several points, including indemnity of additional debts that may be found later. "This is a complex transaction, and there are still issues that need to be finalized. But I really do not expect these negotiations to last too much longer ... it's a matter of a very few number of weeks," Nick Reilly, a GM vice president in charge of the takeover talks, said in an interview with the local JoongAng Ilbo newspaper. "Many of the tougher issues have been resolved." GM's Seoul office confirmed Reilly's remarks. For GM, the acquisition would offer production bases in Asia, the fastest growing automobile market in the world. But the company is reportedly worried that Daewoo's debts -- estimated at $17 billion -- may be even greater than previously declared. Reilly said Daewoo's hard-line labor union was "one of a number of issues" that has caused the delay in negotiations. Daewoo workers staged sometimes violent protests to oppose the proposed GM takeover, which they fear would lead to mass layoffs. But union leaders said Tuesday that GM has agreed to "positively consider" issuing a written guarantee to ensure job security for 100,000 Daewoo workers. To sweeten its offer to GM, Daewoo Motor laid off 1,750 workers last year. GM and Daewoo union officials held their first direct talks on the matter on Monday. Another point of contention are reports that GM wants to acquire fewer Daewoo facilities than it initially pledged in the preliminary accord. GM has not commented on the issue.