General Motors is to take a 67% controlling stake in Daewoo Motor Corporation after signing a memorandum of understanding. It is confident the deal will be completed by the end of the year.
The balance of shares will be taken by Daewoo's creditors. The majority backer – the state-run Korea Development Bank – has agreed to operate the troublesome Pupyong assembly plant. GM will continue to buy production, with an option to acquire the plant within six years.
A UK spokesman for Daewoo said the acquisition would raise consumer confidence in the brand, which has suffered a 51% drop in registrations this year.
“People have been uncertain about buying a Daewoo due to all the talk of bankruptcy. This will give them renewed confidence in the brand,” he said.
“The news has come at a good time for us because we are talking to dealers about taking on franchises – they can now see that we have a long-term future as part of a larger group which will help to attract quality retailers.”
Daewoo this month appointed Arnold Clark in Scotland, Roadworthy in Bristol and Millennium Motor Group in Nottingham.
GM will pay £273m for the business, which includes four of Daewoo's 16 local plants, plus 11 other manufacturing sites worldwide. It intends to retain all staff employed at these facilities, though there are likely to be job losses at the plants not included in the sale which could provoke strike action.
The acquisition gives GM a stronghold in the largely untapped Asian market as well as sales and distribution networks in other countries. It will also look to exploit additional technological development capabilities.
The Daewoo spokesman said: “In the future we hope to take advantage of GM's knowledge, expertise and technology. “But short-term there will be little impact on us. It is not in the plan to merge our network with Vauxhall or move our head office to Luton.”