The Hindu Business Line : Tata Motors acquires Daewoo Commercial for Rs 465 crore

TATA Motors Ltd on Wednesday announced the signing of the investment agreement to acquire Daewoo Commercial Vehicle Co Ltd (DWCV) for a total price of KRW 120 billion, approximately $102 million or Rs 465 crore.

"This is a major step for Tata Motors and a milestone for the group in its quest for globalisation. I am confident that both companies will derive considerable benefits from this arrangement,'' said Mr Ratan Tata, Chairman, Tata group.

The acquisition will be financed equally through Tata Motors's equity in DWCV and direct lending facilities to the Korean truck manufacturer.

When contacted, Mr Praveen Kadle, Executive Director (Finance & Corporate Affairs), Tata Motors, said that the $51-million equity portion shouldered by Tata Motors served to fully cover the equity base of DWCV.

The Korean daily, Chosun Ilbo, reported on its Web site, "Under the contract, the Tatas would acquire the entire stake in the truck maker and the purchase price does not include liabilities and provisions against severance pay for employees.''

The agreement was signed by Mr Kadle and Mr Ravi Kant, Executive Director (Commercial Vehicles Business Unit), and Mr Kwang Ok Chae, Court Receiver of DWCV.

Mr Ravi Kant said, "The complementary product range of the two companies and strengths in product development and international marketing will open new opportunities for both companies.''

The final price paid is marginally lower than the $118-million figure speculated in the foreign media when the binding MoU between the two parties, was first disclosed.

DWCV is Korea's second biggest heavy truck maker with a modern plant in Kunsan capable of producing 20,000 medium and heavy vehicles. It has a market share of over 25 per cent in the Korean heavy truck segment.

For Tata Motors, DWCV is synergic because the Korean company makes commercial vehicles in the 200-400 bhp range, while Tata trucks stop short of 200 bhp.

Though Korea is next door to China, among the world's fastest growing truck markets and possessing a slightly higher power to weight ratio in its models compared to India's, Mr Ravi Kant has mentioned in the past that the Korean market itself is an attractive proposition.

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Tata Motors acquires Daewoo Commercial for Rs 465 crore