Analysts said the deal, which would see Daewoo Electronics swapped for unlisted Samsung Motors Inc, will accelerate the so-called "big deals" among the family-run conglomerates known as Chaebol, viewed as crucial to the country's corporate restructuring campaign.

It would also sharpen the competitive edge of the country's car industry, they said. "Daewoo and Samsung groups have agreed in principle to the company exchange," said a Daewoo Group spokesman. "But there are a great deal of details to be worked out."

Spokesmen at Samsung Group and Samsung Motors were unable to confirm the swap agreement. The deal may be announced after heads of the top five conglomerates meet President Kim Dae-jung at 4:30 PM to nail down the big deals, or business swaps, among Chaebol.

High-ranking government officials lastweek hinted that Samsung's auto unit would be swapped with a subsidiary of another group with debts of a similar size, according to domestic media.

Daewoo Electronics had debts of 3.7 trillion won ($2.99 billion) at the end of June against assets of 4.8 trillion won, while Samsung Motors' debts were 3.6 trillion against assets of 4.3 trillion won, analysts said. They said the fate of Samsung Motors was sealed when it failed to take over Kia Motors and Asia Motors. Hyundai Group won an auction for the two insolvent car companies in October.

"The Samsung-Daewoo swap deal has long been anticipated," said Oh Chnag-Suk, an analyst at Daishin Economic Research Institute.

Samsung Motors only just started up its 100,000-vehicle capacity plant nine months ago. Samsung's move into the car business was ill-timed, coinciding with a steep slump in domestic car demand as the economy slid into recession and deepening overcapacity in the global market.

Analysts said the swap deal would see Samsung Electronics, thecountry's largest electronics company, absorb Daewoo Electronics. Samsung may later spin off the business to focus on semiconductors. Samsung is the world's largest producer of memory chips.

Another deal may see LG Semicon and Hyundai Electronics merging under LG's control. The deal has been stalled by the inability of the two to agree on management control.

The deals could leave two companies in the car business -- Hyundai and Daewoo -- with LG and Samsung the lone competitors in the electronics sector. "As a result of the swap deal, the country's car industry will be able to cut production costs and enjoy economies of scale," said Hwang Chan, an analyst at Dongwon Economic Research Institute. "But in the short-term, labour disputes over layoffs and painful rearrangement process will likely to hurt the industry."

Local media reported on Saturday that the government and leaders of the top five Chaebol had agreed to reduce the top business group units by 40 to 70 per cent through absorption, sales orclosures. A presidential Blue House spokesman declined to comment.