Mumbai: Tata Motors Ltd has signed an agreement for acquiring Daewoo Commercial Vehicle Company Ltd (DWCV), the second largest truck maker in Korea, for about $102 million (Rs 465 crore). Company officials said this is a major step towards globalisation of Tata Motors.
According to Tata Motors, the acquisition will be financed equally through Tata Motors' equity in the Korean company and direct lending facilities to DWCV.
Tata Motors was selected as the "preferred bidder" for acquiring the Korean company in November, last year, out of 10 auto makers who are believed to have expressed interest in acquiring DWCV.
DWCV is the second largest commercial vehicle maker in South Korea with a market share of around 26 per cent. The company produces 200-400 horse power range of heavy duty trucks and has over 93 models of cargo trucks, dumpers, mixer vehicles and also the capacity to make light commercial vehicles.
Daewoo also makes tractors and utility vehicles and has an annual production capacity of 20,000 vehicles. Its heavy commercial vehicles manufacturing plant has not been running to capacity.
DWCV has been under court protection after its parent, Daewoo Motor Company, which declared itself bankrupt in November 2000, sold its passenger car business to a consortium led by the United States-based General Motors Corp
The acquisition of DWCW will help Tata Motors in its efforts to make the 'truck of the future', the prototype of which is likely to be ready by 2005-06 and also enter Southeast Asian markets like South Korea, Thailand and Malaysia as well as China, to truly boost its presence in foreign markets.
Tata Motors is also looking at setting up a base in China for trucks, and has been in negotiations with possible Chinese partners, though no deal has been signed.
Tata Motors holds nearly 67 per cent of the domestic truck market with its current range of products.