a. The government is desperate to sell the most troubled of South Korea’s big companies to foreigners. This, ministers believe, is the best way to accelerate the corporate restructuring begun in the wake of the Asian financial crisis in 1997, and to clear the way for more sustainable economic growth.
b. GM’s deal with Daewoo Motor marks the end of an even longer and more painful process. Ford almost bought the car maker two years ago, but pulled out after deciding that Daewoo would be too hard to turn round.
c. Micron had offered to pay about MYM3.4 billion for Hynix’s core memory business, and to take a minority stake in the non—memory arm. Analysts predict that the government will put pressure on creditors to rescue a deal with Micron or seek a new buyer, as liquidation is too risky to contemplate in an election year.
d. This week, after months of on—off talks with foreign suitors, the government’s plans moved a big step forward, and then an equally big step back.
e. But GM has much work to do to rebuild Daewoo’s damaged brand image and domestic market share, which hovers around 10% after reaching a high of 37% in 1998. GM has to fill holes in product lines by introducing sport—utility and multi—purpose vehicles, says Nick Reilly, former chief executive of Vauxhall, GM’s British subsidiary, and chief—executive— designate of GM—Daewoo now that he has sealed the deal.
f. GM has struck a good deal. Together with various undisclosed partners, it will hold a 67% stake in a new company, tentatively named GM—Daewoo. The American car maker will pay MYM251m for its own stake of 42%, but it will also assume MYM573m of Daewoo Motor’s debts. The acquisition is a key part of GM’s global expansion. The company has been trying to strengthen its foothold in Asia for some time.
g. On April 30th General Motors (GM) signed a contract to buy the bankrupt Daewoo Motor. But on the same day, the board of Hynix, a cash—strapped memory—chip giant, shocked the markets by rejecting a proposed takeover by Micron Technology, an American competitor.
h. His management team can expect trouble from South Korea’s aggressive unions along the way. In a sign of things to come, the signing ceremony was moved to a secret location after a group of union activists occupied the hotel where it was due to take place.
i. Buying a presence in South Korea was seen as particularly urgent, since imports account for only 3% of the 1.5mcars sold in the country each year. GM hopes to use Daewoo’s production lines to make budget cars that will be sold under the Daewoo brand in most markets.
j. GM had been talking with Daewoo for over a year. It has agreed to buy two of the company’s four domestic car plants, a factory in Vietnam, a parts unit in the Netherlands and nine overseassales arms (all in Europe except one, in Puerto Rico of all places). Between them, the two domestic factories can churn out a combined 530,000 cars and 30,000 commercial vehicles a year.
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