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Renault buys Samsung unit
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April 21, 2000: 6:12 a.m. ET
French manufacturer is first automaker to break into the South Korean market
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NEW YORK (CNNfn) - French automaker Renault became the first foreign carmaker to break into the South Korean market by buying Samsung Motors after nearly four months of negotiations, Reuters reported Friday.
"Renault and representatives of (Samsung Motors) creditors have reached a deal which will have to be ratified by a creditors committee next Monday," a Renault spokesman told Reuters.
The spokesman declined to release details of the deal, which will give Renault a presence in one of Asia's largest and least accessible markets. But recent reports in the Korean press have said the company has raised its offer for Samsung Motors to $540 million.
In meetings in Paris, Renault international relations director Jean-Marc Lepeu was in talks with Samsung Motors officials and the Korean company's creditors, who have been looking for a buyer for the ailing firm.
Renault spokesman Marc Carré declined to confirm news agency reports earlier in the day that the parties had reached an agreement for the French company to buy Samsung Motors. The Friday afternoon announcement comes just hours before the deadline for the end of Renault's right to exclusive talks with Samsung Motors.
Renault is seeking to extend its foothold in Asia after it bought a controlling minority stake in Japan's Nissan Motors for $5.4 billion last year.
In early March, Renault floated a plan by which it would pay $450 million to create a new joint company around the Samsung Motors unit. Although a first set of exclusive talks, set to end March 31, fell apart without a deal, the participants left open the possibility of continued discussions.
Agence France-Presse reported the latest round of talks ran into a snag as Renault discovered that Samsung Motors owed about $260 million to sister company Samsung, a giant Korean chaebol, or conglomerate.
Samsung Motors is saddled with debts of about $5 billion.
Unlike the Japanese market, South Korea is on the rebound after suffering a virtual meltdown in 1998. Some 910,000 new vehicles were sold in 1999 and that figure is expected to break the one million mark soon.
Obtaining Samsung Motors gives Renault access to its ultra-modern factory in Pusan, which was built in the mid-1990s with Nissan Motors technology.
Renault bought a controlling stake in Nissan early last year, and is therefore ideally placed to revive the plant, which shut its doors in 1998 at the height of the Asian financial crisis.
Exclusive three-months talks between Renault, Samsung Motors parent the Samsung Group, and the Korean carmaker's creditors began in early January.
Earlier this week, the main creditors of Samsung Motors agreed to a court-proposed settlement of the debt issue, paving the way for a deal with Renault. 
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