Reuters reports that GM’s proposed acquisition of South Korea’s Daewoo Motor Co is facing hurdles over labour and potential liabilities at overseas units. The report cites comments made by Finance Minister Jin Nyum at a press conference in Seoul on Wednesday.
Jin reportedly told a news conference that a recent audit by GM showed potential contingent liabilities at overseas units of unlisted Daewoo Motor.
The Reuters report quotes Jin as saying: “Such potential liabilities are obstacles to selling Daewoo Motor.” Jin did not clarify where exactly the problems are.
After more than a year of talks, GM, the world’s largest car maker, signed a non-binding deal with Daewoo’s creditors in September of last year, saying it was interested in buying four Daewoo plants and other assets for $US400 million.
But a major obstacle to a final deal has been the need for a pact ensuring support from Daewoo’s militant union for the sale of the core operations at the carmaker.
Analysts are divided on the wisdom of GM’s planned purchase of Daewoo Motor assets. Some say that GM could secure an attractive deal, gaining useful assets at a good price. However, there are those who question the wisdom of any deal, saying that involvement with Daewoo Motor is fraught with problems and that the possible benefits come with substantial strings attached.