Ford wins Daewoo auction

Daewoo offers a foothold into Asian markets

Car giant Ford has won the auction for South Korea's troubled Daewoo car firm.

It has been selected as the sole bidder for the firm following a high profile bidding war with fellow global powers DaimlerChrysler and General Motors.

The auction committee, representing creditors of Daewoo, said that Ford now had six weeks to complete a deal.

The committee said Ford was chosen because of its "capabilities to improve Daewoo Motor's corporate value, willingness to transfer technology, provide job security, and contribute to the growth and development of the component industry".

"Ford will conduct about six weeks of due diligence. The committee expects to sign a definitive agreement shortly afterwards," it said.

Biggest bid

If a deal is not completed with Ford after it has completed due diligence - the process of scouring the books of the business - the committee said it would talk again with DaimlerChrysler and General Motors.

It is reported that Ford submitted the highest bid, of about 7.7 trillion won ($6.9bn), although no figures have been released.

Daewoo Motor, once the country's second largest auto maker, has an estimated 8.6 trillion won ($7.6bn) in debts. Its assets have been valued at about $11.4bn.

Industry analysts say Daewoo Motor provides a good opportunity for car firms to make inroads into the fast-growing Asian markets.

DaimlerChrysler and South Korea's Hyundai Motor put in a joint bid, as did General Motors and Italy's Fiat.

The joint bid by Hyundai and Daimler Chrysler faced strong opposition from Daewoo workers who set fire to Hyundai cars in a violent protest.

Industry shake-up

The protesters claimed Hyundai's acquisition of Daewoo would grant Hyundai a 90% market share and monopoly status here.

Daewoo can make two million cars a year and is prized as a strong competitor in South Korea, Southeast Asia and Eastern Europe.

Last July, Daewoo group creditors stepped in with emergency funds, when the car maker and its 11 sister companies ran into trouble.

Creditors are now in the process of dismantling South Korea's second-largest conglomerate.

The auction is part of Seoul's efforts to restructure the country's auto industry.

In April, France's Renault became the first foreign car company to acquire a local car company, buying into Samsung Motors.