Consortium with US fund puts in bid for $700 m for 97.6 pc stake

Our Bureau

Fresh acquisitions

Videocon has already

taken over Thompson's global picture tube business for about Rs 1,260 cr and Electrolux Kelvinator India

If the Daewoo

deal goes through, it will be Videocon's third major acquisition in the last one year

Talks on to

buy Thai CRT, one of the world's leading TV picture tube makers

Mumbai, Sept. 8

As a part of its global initiative, Videocon Industries is close to snapping up a controlling stake, along with a consortium partner, in Daewoo Electronics Corp, Korea's third largest electronic goods maker.

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.

When contacted, Mr Venugopal Dhoot, Chairman, Videocon Industries, confirmed being in the run for acquiring Daewoo, while declining to comment on the bidding process to abide by the non-disclosure agreement. He, however, said the company was on the look out for fresh overseas acquisitions, including in the US.

Agency reports from Seoul said Videocon and its consortium partner, the US-based private equity fund RHJ International, the holding company of the US fund Ripplewood, have breasted the tape 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 highest points in terms of acquisition price and ability to deliver it, the reports said.

The 97.6 per cent stake in Daewoo is now being held by creditors of the company, including Woori Bank and Korea Asset Management Corp, after it came under a creditor-led debt-restructuring programme, following its insolvent parent, Daewoo Group, being put under a workout programme. The creditors have been seeking to sell the controlling stake since November 2005.

Quoting a Woori official familiar with the deal, the agency report said the South Korea-based private equity fund MBK Partners was selected as secondary bidder for the deal. In the event of the Videocon consortium not proceeding with its offer, the secondary bidder would be next in line. For Videocon, acquisition of Daewoo will lift its presence in the overseas markets, riding on the strength of Daewoo's brand power and elaborate sales network. The product portfolio could also become wider.

The Seoul-based electronics maker, a former unit of the Daewoo Group that collapsed in 1999, posted a 94-billion won loss last year, compared with a 30-billion won profit in 2004, after sales declined 6.4 per cent to 2.2 trillion won, say agency reports. Daewoo's book value, or assets minus liabilities, was 375 billion won at the end of last year, according to the latest regulatory filing.

Videocon is also reported to be in discussions to acquire Thailand-based Thai CRT, one of the world's leading television picture-tube makers. The possible Thai acquisition, according to analysts, could follow the Korean deal. The shares of Videocon Industries climbed up to close at Rs 414.65 on the BSE on Friday, against the close of Rs 408.55 on Thursday.

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(This article was published in the Business Line print edition dated September 9, 2006)
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