General Motors Corp. and DaimlerChrysler are back in the battle to become Asia's number one car maker following Ford Motor Co's withdrawal from a deal to buy ailing Daewoo Motor.
Both will be looking to see what the South Korean firm's creditor banks decide Monday after Ford dropped its $6.9 billion bid to buy Daewoo Motor Co. following three months pouring over the troubled company's finances.
Ford had been named the winning bidder for Daewoo in June, beating DaimlerChrysler, South Korea's top automaker Hyundai Motor Co. and a joint bid by General Motors (GM) and Fiat of Italy.
Ford's withdrawal threw the auction into disarray. However, South Korean officials promised to find new bidders.
Foreign auto companies have been seeking to gain a toehold in South Korea, the second largest car market in Asia after Japan.
Daewoo also offers the potential to make small cars around the world with an annual production capacity of two million vehicles and 11 overseas plants in Poland and India among other countries.
In September, France's Renault jumped into the South Korean market by acquiring Samsung Motors Inc.
DaimlerChrysler had also secured a nine-percent stake in Hyundai.
GM was quick to say it would like to resume talks with Daewoo. The GM-Fiat consortium is now considered the front-runner.
DaimlerChrysler, however, looked less interested in making a new bid. "We are not interested in taking over Daewoo," DaimlerChrysler spokesman Michael Pfister said last week.
But its partner, Hyundai Motor, said it was ready to make the second bid, although its chances of success are slim.
"We have no idea on how the government will react to our bid but discussions are underway with Daewoo's creditors," Hyundai Motor president, Lee Kye-An, told South Korean newspapers.
Anti-trust watchdogs had opposed Daewoo's sale to Hyundai, which acquired Kia Motors Corp. last year, gaining control of a 70 percent share in the domestic market.
Thus Daewoo's fate depends on whether GM resurrects its bid. The US company had made a five-billion-dollar bid for Daewoo but South Korean officials believed its final offer would be lower.
Some analysts did not rule out the possibility of Ford coming back to the auction, saying the US company might have pulled out as a ploy to lower the price.
"Ford had wanted to bring down the price. Ford is still interested and this may just be a strategic tactic to get the government back to the negotiating table," Samsung Securities' Mark Barclay said.
There have been few clues as to why Ford withdrew from the bidding but US analysts say Daewoo's huge debt could have been a big factor.
"I think Ford probably discovered it was a can of worms and they were better off without it," said David Healy, an auto analyst with New York-based Burnham Securities.
South Korea's financial watchdog last week filed charges with prosecutors against Daewoo Group founder Kim Woo-Choong and 40 others for rigging books to the value of 22.9 trillion won ($20.8 billion).
Ford's withdrawal came a day after it announced a five-billion-dollar share buyback scheme.
The company had admitted it was having difficulties with a costly recall of Ford Explorer vehicles fitted with Bridgestone/Firestone tyres known to have have been involved in fatal accidents.
But Ford has refused to comment on talk that its withdrawal from the Daewoo auction was linked to its own problems.— (AFP)
© Agence France Presse 2000
© 2000 Mena Report (www.menareport.com)
