The Telegraph
Since 1st March, 1999
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Tatas close to Daewoo coup

Mumbai, Oct. 22: Tata Motors today said it was close to a deal that would give it control of Daewoo Commercial Vehicle Company, opening a Korean beachhead for the auto maker in its drive to be a global giant.

The company is the “preferred bidder” for acquiring the Daewoo unit. It would now have to enter into an understanding, which will be followed by a due diligence.

The commercial vehicle unit of Daewoo Motor Corporation was incorporated under a Reorganisation Plan on November 1, 2002. Daewoo’s truck plant was created after General Motors (GM) acquired the car units.

The truck plant is currently the second-largest manufacturer of heavy commercial vehicles in Korea with a market share of 26 per cent.

The unit will offer a platform for a quick ramp-up in south-east Asia, including South Korea, Thailand and Malaysia. More important, it will enable the firm to break into China. It offers a huge potential for growth as the size of the heavy vehicle market in China would be bigger than India’s.

If the acquisition comes through, it would give the Tatas a presence in the commercial vehicle markets of south-east Asia and the West. The move comes days after Tata Motor’s deal with Rover to market its Indica cars in England and other European countries under the Rover marque.

Tata Motors is learnt to have asked DSP Merrill Lynch to prepare their bid for the Daewoo Motors-owned truck unit, a part of the financially beleaguered Daewoo Corporation and out of operation for some time.

The top-brass at Bombay House, the seat of the Tatas, has reportedly given the green signal to bid for the plant after several rounds of deliberations last fortnight.

Analysts tracking the company said the company's bid should be seen in the context of the Indian auto major eyeing the overseas markets as it is already the market leader by a huge margin in the Indian CV segment.

The development also signifies the rapid pace at which Indian companies are expanding beyond its boundaries.

Only last week, Reliance Industries announced its Rs 1000 crore successful bid for international telephony major Flag Telecom.

Tatas bid has come at a time when it is in the process of developing a new version of a global truck mode in the heavy commercial vehicle segment.

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