Ford named sole bidder for Daewoo Motor

"The committee expects to sign a definitive agreement shortly afterwards," Oh told a news conference. Ford offered better capabilities "to improve the corporate value of Daewoo motor, willingness to transfer technology, provide job security and contribute to the growth and development of the components industry," he said.

Oh declined to elaborate on details of Ford’s winning proposals, citing a confidentiality agreement.

But Financial Supervisory Commission Chairman Lee Yong-keun said Ford offered 7.7 trillion won ($6.9 billion) for Daewoo Motor and its affiliates, along with the passenger car division of sister company, Ssangyong Motor.

Analysts said nothing was certain with tough talks ahead. "We expect the final price to come in at a much lower level as there is no competition in the bidding and it is likely that more contingent liabilities will pop out during due diligence," said Chia Liang Lian of Merrill Lynch Securities in Seoul. Ford’s was one of three bids for Daewoo.

DaimlerChrysler AG and South Korea’s biggest automaker, Hyundai Motor, submitted a joint bid as did General Motors and Italy’s Fiat SpA. Oh said the committee will ask the other candidates for fresh proposals should negotiations fail with Ford.

Ford’s executive director for Asia Pacific New Business Development said the world’s number two carmaker’s selection as sole bidder "will expedite the process of negotiations". "As we indicated in our proposal…our vision is to establish a strategic partnership with Daewoo," he said.

Ford made an unsuccessful bid to buy Korea’s Kia Motors in 1998. Hyundai Motor, a rival in the Daewoo bidding, eventually won control of then-insolvent Kia.

The Hyundai-Daimler bid appeared to be in trouble from the start. Juergen Schrempp, chairman of Daimler Chrysler, told a German newspaper the US-German auto giant was only interested in "attractive" parts of Daewoo, not a full-blown takeover.

Korean regulators had also expressed concern over the anti-trust implications of a bid from Hyundai, which already controls 70 per cent of the Korean car market. "We don’t think the assessment of proposals was done fairly," said a Hyundai Motor spokesman.

Merrill Lynch’s Chia said Hyundai is better off, at least in the near term, without Daewoo. "I think Hyundai will have a better return by solidifying the collaboration with (DaimlerChrysler)," Chia said.

Unlisted Daewoo Motor’s affiliates soared on the news. Ssangyong Motor closed at its 15 per cent daily limit-up at 2,815. Daewoo Motor Sales closed limit-up per cent at 4,195.

Daewoo Motor has an annual output capacity of two million vehicles and is prized as a strong competitor in South Korea, Southeast Asia and Eastern Europe. Korea’s second largest automaker sold more than 945,000 vehicles last year. The deal with Ford would mark the first time a foreign company has taken over a major manufacturer in South Korea, a global competitor in ships, vehicles and electronics.

GM, which broke off a 15-year alliance with Daewoo in 1992 over differences in marketing strategy, would seem to be the biggest loser in the battle for Daewoo. The company aggressively pursued Daewoo in the bidding war against arch rival Ford. "We still think we offered the best proposal for Daewoo Motor," said Lee Ki-sup, GM Korea’s spokesman.

GM was believed to have offered about $5 billion.

Daewoo Motor’s creditors rescued the automaker and 11 other Daewoo Group firms from imminent bankruptcy last year.

They have assessed Daewoo Motor’s liabilities at 17.9 trillion won ($16.01 billion) against 11.8 trillion won in assets.