Bidding war for Daewoo Cars

Daewoo cars are made and sold far and wide

The world's leading carmakers have lined up to bid for Korea's Daewoo Cars, which is up for sale after the parent company got into financial difficulties.

Ford, General Motors, and DaimlerChrysler are all hoping to take over the troubled Korean firm.

DaimlerChrysler and Hyundai are bidding jointly for the troubled South Korean car maker Daewoo after announcing plans to tie up.

Meanwhile, GM and Fiat announced a joint bid for Daewoo, with a promise to keep Daewoo's brand name, a commitment to full employment for Daewoo workers, and a promise to creditors to allow some of their bad debts to be converted into equity the new company.

Ford Motor Company, which already owns a controlling stake in Japan's Mazda, is the third bidder.

Daewoo, saddled with debts, is being sold by its creditor banks for around $3bn.

Government officials in Seoul do not want Hyundai to take control of Daewoo unless a foreign firm is involved as well.

Hyundai already owns South Korea's third largest car firm, Kia, which also hit financial problems.

And the other Korean producer, Samsung Cars, was bought by Renault in April for $562m.

A shortlist of two will be unveiled by 30 June.

Asian presence

The bid by DaimlerChrysler is another step in developing its presence in Asia, which is weaker than some of its world rivals.

Under the agreement announced Monday between DaimlerChrysler and Hyundai, the US-German car giant will take a 10% stake in the South Korean company for 480bn won, or $430m.

A joint venture agreement between the two companies will produce commercial vehicles.

Hyundai will also help create a "world car" with DaimlerChrysler and Japan's Mitsubishi. DaimlerChrysler recently agreed to buy a 34% stake in Mitsubishi while the Japanese company owns a 4.8% in Hyundai.

"Hyundai aims to become a major global player by the end of this decade with 4 million units, and this is one of the steps to reach that goal," said Stephen Kitson, a Hyundai spokesman.

Daewoo has the capacity to make about two million vehicles a year at its plants in Korea, Poland and elsewhere.

But it lost $3.9bn on sales of $5bn last year.

Daewoo debts

Daewoo Motor's liabilities were said last November to total 18.6 trillion won ($16.6bn) against 12.9 trillion won of assets.

It is being sold as part of a restructuring of Daewoo group, one of Korea's biggest companies, or chaebols. It collapsed at the height of the Asian crisis, with debts of more than $70bn.

The banks who now own Daewoo have been involved in breaking it up and selling off its more profitable subsidiaries.