Ford Motor Co.'s rejection of Daewoo Motor Co. has it and other major automakers rushing to rethink their strategies for South Korea.
At least two - General Motors and Hyundai Motor Co. - say they are still interested in debt-ridden Daewoo, although Hyundai's bidding partner, DaimlerChrysler, says it is not.
Ford says it is looking at other undisclosed options. At stake is access to South Korea, Asia's second largest vehicle market. With an annual capacity of 2 million vehicles and a strong position at home and in eastern Europe, Daewoo looks like the ideal acquisition.
But Daewoo's escalating debt is a major problem. At the end of June, Daewoo owed almost $18 billion to creditors, up from about $15 billion at the end of 1999.
'We regret that Daewoo Motor has lost valuable time while its condition continues to deteriorate,' said a GM spokesman in response to Ford's announcement that it would not submit a final offer for Daewoo.
A Hyundai spokesman said the company made an offer during the original bidding process and, 'in light of the latest news, we will be looking at the situation again.'
In late June, Ford beat out the joint bids of GM-Fiat Auto SpA and Hyundai-DaimlerChrysler for the right to negotiate a deal to buy Daewoo.
Ford's preliminary bid for Daewoo was valued at $6.9 billion, about $1 billion higher than Hyundai-DaimlerChrysler and $2 billion higher than GM-Fiat.
Many analysts and industry executives said the Ford bid was excessive and likely would be sharply reduced. A Ford source said the company had discovered in due diligence that Daewoo's debts were far greater than previously estimated. Indeed, the Korean government's powerful financial supervisory commission said that Daewoo executives had exaggerated the value of the parent Daewoo Group by some $21 billion in an effort to mislead investors and regulators. 'Read that story,' the source said when pressed for a reason why Ford had withdrawn from the deal.
Joe Miller, Susan Carney, Chris Wright and Donald Kirk contributed to this report