SEOUL, South Korea -- General Motors signed an agreement to buy parts of bankrupt Daewoo Motor Co. The deal, as expected, does not include Daewoo's U.S. dealer network.
In a fitting cap to more than a year of tumultuous negotiations, the signing ceremony had to be first postponed, and then moved to a new location behind closed doors after more than 50 unionists from Daewoo Motor Sales in Korea, wearing red headbands, invaded the planned ceremony site.
Under terms of the deal, GM and as-yet-unidentified GM partners will pay $400 million for 67 percent of a new company that will be formed to take over specified Daewoo Motor assets. GM will own 42 percent of the new company, GM partners will own 25 percent, and Daewoo's creditors will own 33 percent. The new company has yet to be named.
GM's initial investment in the new company will be $251 million.
The new company will take over nine sales and distribution units outside of Korea and a total of three manufacturing plants.
The sales units are in Puerto Rico, Austria, Germany, France, Italy, Spain, Switzerland, and the Benelux countries of Belgium, the Netherlands, and Luxembourg. The new company also will take over Daewoo's parts operations in the Netherlands.
In the United Kingdom, the sales subsidiaries will not be acquired. GM intends for the new company to set up a new sales operation there. In other European markets handled by independent importers and distributors, the new company will review those sales arrangements. No decision has been made yet as to what will happen in those markets.
The new company will take over Daewoo's assembly plants in Changwon and Kunsan, Korea, plus a factory in Hanoi, Vietnam.
The new company will use the Daewoo brand in Korea, in certain countries where independent distributors exist, and in countries where overseas sales subsidiaries are being acquired, such as those in Western Europe.
In addition, Daewoo products will be exported to new markets, such as Mexico, and sold under established GM or GM-affiliated brands.
The new company "will produce a new generation of cost-competitive vehicles that can be marketed around the world," GM Chairman John Smith Jr. said in a statement.
The transaction is expected to close within three months, pending bankruptcy-court and government approvals.