The Hindu Business Line : Daewoo Electronics takeover: Videocon may sign MoU by month-end

Preferred bidder
Videocon has only signed a non-disclosure agreement so far.
It will be Videocon's third major acquisition in the last one year.
The Videocon consortium becomes the primary bidder.

Mumbai Sept. 12

The Videocon-led consortium, selected as the preferred bidder to buy out Daewoo Electronics Corp of Korea, is expected to sign a preliminary MoU by end-September. Indications are that the deal is likely to be wrapped up by the year-end.

Negotiations between Videocon Industries, with its partner, the US fund Ripplewood, and the creditors of Daewoo Electronics, are progressing well, sources close to the deal said.

Non-disclosure deal

Referring to reports that Videocon had concluded an agreement to acquire Daewoo Electronics, Mr Venugopal Dhoot, Videocon Chief, told Business Line that his company had only signed a non-disclosure agreement.

He clarified that the company had not yet signed any agreement for acquisition of the Korean outfit.

"The non-disclosure agreement is customary for such deals," he said, adding that he was not at liberty to speak anything about the deal at the moment.

The shares of Videocon Industries closed at Rs 405 .65 on the BSE on Tuesday, a 0.05 per cent rise since Monday's closing.

The creditors of Daewoo, including Woori Bank and Korea Asset Management Corp, hold 97.6 per cent stake in the Korean company, after it came under a debt-restructuring programme, when its insolvent parent, Daewoo Group, was put under a workout programme. The creditors have been seeking to sell the controlling stake in the Korean firm since November 2005.

If the deal goes through, it will be 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 AB Electrolux of Sweden.

Earlier, the Videocon consortium was selected as the preferred negotiator to buy a controlling stake of 97.6 per cent in Daewoo Electronics for a reported price of around $700 million.

The Videocon consortium became the primary bidder having scored the highest points in terms of acquisition price and ability to deliver it.

Secondary bidder

The South Korea-based private equity fund, MBK Partners, was selected as a secondary bidder for the deal. In the event of the Videocon consortium not proceeding with its offer, the secondary bidder would be given the opportunity to negotiate.