Daewoo deal 'favours' GM

GM's deal left chunks of Daewoo Motor behind

The car giant General Motors' supposed role as a "white night" rescuing South Korea's Daewoo Motor has been tarnished by analysts who say it is in the company's own interests.

Analysts say GM's non-binding agreement to take over parts of the bankrupt car maker will do more for the US company than for the South Korean one.

Some say the price GM has agreed to pay is a serious under valuation of Daewoo Motor, even though, in the words of JD Power and Associates analyst Jeff Schuster, "there would definitely be capital needs going forward that would increase the overall price tag".

More to the point, the state-run Korea Development Bank pointed out that Daewoo plants in ten countries could face liquidation unless they undertake serious cost cutting measures and slash several thousand jobs in bids to attract new buyers.

Bad news for Daewoo Motor and South Korea, perhaps, but there are two sides of the coin.

"The deal's structured a lot more favourably to GM than I feared it would be," said Standard & Poor's analyst Efraim Levy, applauding the deal.

At least two of the car production plants rejected by GM could survive; its Indian and its Polish facilities are attractive take-over targets according to observers.