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Renault agrees to buy bankrupt Samsung; Carmaker seeks access to S. Korea; Automobile industry


PARIS -- Renault SA, which owns 37 percent of Japan's Nissan Motor Co., said yesterday that it had agreed to buy bankrupt South Korean rival Samsung Motor Inc. for an undisclosed price.

Samsung Motor's creditors will meet Monday to ratify the accord, Renault said, declining to give further details. The Korean Economic Daily reported Thursday that Renault had raised its offer by $90 million to $540 million. Samsung Motor declined to comment further.

Buying South Korea's smallest automaker would let Renault enter the country's closed auto market, which is recovering from recession, as the company seeks to tap rising demand for cars in Asia. Renault, Europe's No. 5 automaker, bought its Nissan stake last year.

No other automaker has said it wants to bid for Samsung Motor, through some analysts say rivals have been preparing offers.

Renault and Samsung Motor's lenders negotiated for more than six weeks as the French company refused to increase its offer of $450 million or take on debt. The lenders cut their asking price twice, to $627.5 million from more than $900 million.

Renault is offering $100 million in cash paid up front and $200 million from future operating earnings, the Korean Economic Daily said. Renault would assume $200 million of debt with no interest payments for 10 years. Samsung Motor's creditors also would swap $40 million of the company's debt for equity, the paper said.

On March 6, Renault initially offered to acquire Samsung Motor by setting up a joint venture, owning 70 percent and giving Samsung Group the rest. The reported agreement cuts Samsung Group's stake to 20 percent and gives the creditors 10 percent. A South Korean court threatened this week to liquidate Samsung Motor unless the parent company and the creditors accepted its proposal to split the proceeds from the sale.

Acquiring Samsung Motor could make sense for Renault because its main plant in Susan uses Nissan car-making technology. Renault has said it will keep making Samsung cars, though analysts said it wouldn't cost much to adapt the plant to assemble Nissans or Renaults. Other automakers are also seeking to expand in Asia. DaimlerChrysler AG said last month that it had agreed to pay $2.1 billion for 34 percent of Japan's Mitsubishi Motors Corp.

The Economist Intelligence Unit forecasts that South Korea's economy, which expanded by 10.7 percent last year, will grow by 7.6 percent this year and by 5.5 percent next year, boosting consumer spending power.

The agreement represents one of South Korea's few significant asset sales and will let Samsung Motor creditors, many of them state-run banks, recover some loans.

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