Daewoo buy may give Videocon an edge
Videocon Industries’ acquisition of Daewoo Electronics would not only be the company’s third major global acquisition in two years, but more importantly, give it access to high-end technology in plasma display panels TV, liquid crystal display TVs, refrigerators and washing machines. Industry analysts point out that the acquisition would allow Videocon to introduce new technologies in India, as well as give it access to markets abroad.
According to Prime Broking research, this acquisition will enable the company to strengthen its position in markets where it has a modest presence today such as the US, South Korea, Japan and Europe. It will also be able to leverage Daewoo’s R&D centres for TVs and home appliances, as well as get its hands on world-class appliances manufacturing facility.
Pros & Cons
Globally, Daewoo enjoys good brand equity and would give an entry point for Videocon to also introduce its current products in international markets.
A local analyst also remarked that Videocon may also want to introduce the Daewoo brand in India to complement its multi-brand strategy. The company’s portfolio of brands already includes Akai, Sansui, Toshiba, Hyundai, Electrolux and Kelvinator.
A domestic industry watcher, however, said that it is too early to comment on the feasibility of the acquisition and it would depend on how the deal is structured, the specifics of which are not available yet.
"Internationally, there is already excess capacity in picture tubes that is available. Further, Daewoo has not invested substantially in R&D in recent years so in terms of technology they may gain little. In its previous acquisitions, however, there has not been substantial outgo for Videocon as both Thomson and Electrolux invested roughly the same amount to pick up stake in Videocon Group subsidiaries," he said, adding that post the completion of the Daewoo acquisition, Videocon would need to focus on consolidating and integrating its global purchases with its Indian operations.
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