Videocon to buy Daewoo Elec
Videocon Industries Ltd, with its consortium partner Belgium-based holding company RHJ International, has inked a deal to acquire Daewoo Electronics Corporation, Korea’s third largest electronics company, for about Rs 3,200 crore.
An MoU was signed on October 20, between the Videocon-consortium and creditors of Daewoo, including Woori Bank and Korea Asset Management Corp. The creditors hold 97.6 per cent stake in Daewoo, after it came under a debt-restructuring programme, following its insolvent parent, Daewoo Group, being kept under a workout. The creditors have been seeking to sell their controlling stake in the Korean outfit since November 2005.
Videocon officials would not provide details about the consortium, but Reuters, reporting from Brussels, said the Belgian company expects that it and Videocon will each own about one-half of the consortium. Sources tracking the deal, however, said Videocon may end up having a majority stake in the company.
In a statement, Woori Bank announced the signing of the MoU, stating that the proposed aggregate consideration for the purchase of shares of Daewoo is about Korean won 700 billion (around $730 million).
This is Videocon’s third major acquisition in the last one year, after it took over Thompson’s global picture tube business for about Rs 1,260 crore and Electrolux Kelvinator India, the Indian subsidiary of A.B. Electrolux of Sweden.
Daewoo has manufacturing facilities in Poland, Mexico, Spain, Vietnam, and China, apart from Korea.
Mr Venugopal Dhoot, Videocon Chairman, told Business Line that the Daewoo acquisition would bring about significant synergies, with the Korean firm having a products portfolio that includes microwave ovens, air-conditioners, motors, vacuum cleaners and compressors.
He said the company would fund the acquisition through a combination of debt and equity.
Videocon Industries is currently sitting on cash surpluses of about $300 million.
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