Videocon snap up Daewoo consumer electronics group

Videocon Industries Ltd. will be catapulted among the top ten consumer electronics companies in the world with the acquisition of the sick Korean giant Daewoo consumer electronics group.  Videocon on Monday said a consortium led by it has reached an agreement to acquire South Korea’s debt-burdened Daewoo Electronics for $713 million (Rs 3,210 crore). The agreement was signed on October 20 by a consortium led by Videocon and creditors of the troubled South Korean firm, which was earlier part of the Daewoo group that wound up in 1999 after running up a debt of about $80 billion.

“Videocon-led consortium (has) entered into an agreement for acquiring Daewoo (Electronics) at $713 million,” a company official confirmed.  Mr Venugopal Dhoot, chairman of the Videocon group said, “We have signed a primary deal and the value is $713 million. For us it is a significant deal as it gives us exposure in the US and the rest of the world where they have factories.”
With this acquisition Videocon Industries becomes a $5.5 billion company.

Mr Dhoot who is leaving for Seoul on Tuesday said, “In this era of globalization unless one has a consumer brand and an auto brand that is globally recognized one is not considered a global company. Today LG and Samsung are household names because they are a consumer brand and so is Hyundai in the auto sector. It is expedient for us to have at least one globally recognized consumer brand,” Mr Dhoot said.

Videocon and US-based equity fund Ripplewood had jointly bid for Daewoo Electronics, after it was put on the block by its lenders. In a separate statement, the creditor financial institutions committee for Daewoo Electronics said: “The consortium was selected… As an exclusive negotiation partner based on various factors including financial capacity, complementarities of businesses, track record in various acquisitions including commitment toward ongoing investments…”

The deal will mark Videocon’s third purchase in a year after the purchase of Thompson’s global picture tube business for 240 million euros and loss making Indian subsidiary of AB Electrolux, Sweden. Videocon had taken over Electrolux Kelvinator India in a cashless transaction, wherein AB Electrolux agreed to subscribe to Videocon’s GDR worth about Rs 406 crore as part of the deal. While the Daewoo deal has been on for months now, the news of the ac-quisition comes on the heels of compatriot — Tata Steel — reaching an agreement to acquire Corus.