Dec. 4 (Bloomberg) -- General Motors Corp., the biggest foreign automaker in South Korea, offered to buy a controlling stake in Ssangyong Motor Co. worth about $550 million by market value, joining an auction for the nation's fourth-biggest carmaker.

General Motors submitted a letter to creditors selling 55.4 percent of Ssangyong, saying it plans to bid for the maker of Rexton and Korando sport-utility vehicles, said Kim Sung Soo, a spokesman for Seoul-based GM-Daewoo Auto & Technology Co., the nation's third-largest car producer. He declined to elaborate.

Ssangyong shares rose 5.4 percent as a merger with GM-Daewoo would help both companies close the gap with market leaders Hyundai Motor Co. and Kia Motors Corp. General Motors Chairman Rick Wagoner said in Seoul this year that China, India, Thailand and Korea were four of eight countries that will account for 50 percent of industry growth in the next five years.

``GM's takeover is the best option for Ssangyong,'' said Chung Doo Sun, who manages the equivalent of $210 million at CJ Investment Trust Management Co. in Seoul. ``If Ssangyong is taken over by a Chinese rival or any other company that's not as advanced as Ssangyong, it won't be beneficial to Korea.''

China's Chonche Auto Service, a closely held company that owns a chain of vehicle repair shops for the Chinese military, has told Samil Accounting Corp. that it is interested in buying Ssangyong, the spokeswoman of its parent company said.

Chohung Bank and 27 other creditors are putting Ssangyong up for auction after its parent Daewoo Group collapsed in 1999 under $80 billion of debt. Samil, the South Korean associate of PricewaterhouseCoopers LLP, is arranging the sale and fixed a Dec. 11 deadline for offers.

Catching Up

A successful takeover of Ssangyong could add 189,000 units of annual production to GM-Daewoo's capacity of 870,000 units, according to an estimate by Good Morning Shinhan Securities Co.'s analyst Sohn Jong Won. Kia, South Korea's second-biggest vehicles assembler, can produce 1.15 million units a year, Sohn said.

Ssangyong shares, which have almost doubled this year, rose as much as 8.6 percent in Seoul, even as the benchmark Kospi index fell 0.4 percent. The stock closed at 9.840 won.

Detroit-based General Motors, the world's biggest automaker, is one of eight multinational companies that submitted letters of intent to Ssangyong Motor's creditors, according to Chosun Ilbo, which first reported the letter.

India's Tata Motors Ltd. and France's second-biggest carmaker Renault SA were also interested in buying Ssangyong, South Korean newspapers said. Both companies denied they had submitted offers.

General Motors' interest in Ssangyong Motor ``is routine and largely exploratory at this phase,'' the company said in an e-mail reply to Bloomberg's queries, declining to elaborate.

General Motors

General Motors created GM-Daewoo in October last year after buying the carmaking plants of Daewoo Motor Co. for $1.7 billion, ending almost three years of talks. General Motors linked with its partners, Suzuki Motor Corp. of Japan and Shanghai Automotive Industry Corp. of China, to buy Daewoo Motor's main assets.

General Motors may be participating in the auction to gain information on a rival rather than buy Ssangyong Motor, Good Morning's Sohn said. That's because bidders in an auction usually get additional information on a company's finances without having to make good on their intention, he said.

Ssangyong Motor, which also makes Chairman passenger sedans, has been run by a committee of creditors since 1999.

``Ssangyong's been on sale for several years now, if GM was ever serious, they would have made a move a long time ago,'' said Sohn. ``I think GM is just joining in to look around.''

Last Updated: December 4, 2003 05:12 EST