Daewoo to take over debt-ridden Ssangyong Motor
SEOUL, South Korea (AP) _ In the first big friendly takeover among South Korea’s leading conglomerates, Daewoo has agreed to buy a debt-ridden auto unit of the Ssangyong group.
The deal announced today ended months of effort by Ssangyong, the nation’s sixth-largest conglomerate, to restructure its ailing auto unit or sell it. Ssangyong makes four-wheel drive vehicles and vans.
Daewoo Motors Co., the nation’s second-largest automaker, said the takeover will expand its range of car production before it moves into the U.S. market next year with its compact Leganza model.
``Our takeover of Ssangyong is complementary. Ssangyong can expect to boost sales through Daewoo’s well-organized overseas networks,″ said Kim Tae-koo, chairman of Daewoo Motors Co.
Daewoo Group, the country’s fourth-largest conglomerate, is buying Ssangyong Group’s 53.5 percent stake in Ssangyong Motor. Most of the rest of the automaker’s stocks are owned by individual investors.
The two groups had been negotiating secretly for weeks, and agreed on a complex formula to split Ssangyong Motor’s $2.8 billion in debt. SSangyong’s creditor banks have approved the deal, the conglomerates said in a joint statement.
Last month, Ssangyong’s parent group sold its paper manufacturing unit, Ssangyong Paper Co., to Procter and Gamble.
Today’s deal follows the International Monetary Fund’s bailout of South Korea’s foundering economy, and South Korea’s conglomerates are rushing to improve their financial standing.
The $57 billion IMF bailout comes with strict conditions which experts say will force many financially weak companies into bankruptcy.