GM seeks to gain near complete control of South Korea unit

SEOUL Sun Oct 21, 2012 9:23pm EDT

The General Motors logo is seen outside its headquarters at the Renaissance Center in Detroit, Michigan in this file photograph taken August 25, 2009. REUTERS/Jeff Kowalsky/Files

The General Motors logo is seen outside its headquarters at the Renaissance Center in Detroit, Michigan in this file photograph taken August 25, 2009.

Credit: Reuters/Jeff Kowalsky/Files

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SEOUL (Reuters) - General Motors Co (GM.N) is looking to gain close to complete control of its South Korean unit by buying a 17 percent stake held by the unit's second-biggest shareholder, a move that has renewed concerns it could be paving the way for restructuring steps.

GM owns close to 77 percent of GM Korea but Korea Development Bank's 17 percent holding gives the state-run bank the right to veto decisions made by the automaker.

Tim Lee, head of international operations at GM made an "informal offer" to the bank's Chief Executive Kang Man-soo during a meeting in South Korea on Friday, said an official from the bank who was briefed about the matter. He said the bank would consider the sale once it receives an official proposal.

A GM Korea spokeswoman declined to comment.

GM Korea, created after GM took a majority stake in failed Daewoo Motor in 2002, is South Korea's third biggest carmaker after Hyundai Motor (005380.KS) and Kia Motors (000270.KS). The remaining 6 percent stake is held by China's SAIC Motor Corp (600104.SS).

South Korea is a small market for GM, but one of the U.S. carmaker' s key production bases, exporting Chevrolet-branded cars to Europe and other countries and accounting for about a quarter of GM's Chevy production globally.

Local media have voiced concern that a deal could give GM a free hand if it carries out restructuring at its South Korean plants.

Reuters reported in January that GM could transfer some Chevrolet production from South Korea to Opel in Europe in a bid to salvage its struggling European unit although a top official said in May that it did not have any such plans.

The U.S. automaker has also moved to increase control at other Asian units. It said last week that it bought back most of the 50 percent stake in its Indian operations that it had sold to SAIC Motor Corp, regaining control of the venture.

(Reporting by Joyce Lee and Hyunjoo Jin; Editing by Edwina Gibbs)

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