News: Videocon signs $700 m deal to buy Daewoo Electronics

(PTI 12/09/2006) New Delhi - Videocon has acquired South Korea's Daewoo Electronics in a deal which is reported to be worth around $700 million (nearly Rs 3,220 crore).

"We signed (the agreement) today morning," Videocon chief, Venugopal Dhoot, told PTI. He, however, declined to comment on the details of the deal, including the valuation, citing "no disclosure agreement".

Videocon had jointly bid with US-based equity fund Ripplewood for the debt-burdened Daewoo Electronics, which was put on the block by its lenders. The consortium reportedly offered $700 million for a 97.5% stake held by the creditors.

According to reports from Seoul, the consortium is 50.1% owned by Videocon and the rest by Ripplewood.

An AFP report, quoting a statement from Daewoo Electronics, said a takeover was the "only realistic option" to save the country's third largest electronics group, which is now in the seventh year of a debt workout programme.

Expressing strong support for the takeover led by Videocon, Daewoo's President Lee Seung-Chng said the reason for actively pushing for a merger and acquisition was the company's desperate need for investment in technology development.

The deal marks Videocon's third purchase in the last one year after Thompson's global picture tube business for 240 million euros (about Rs 1,260 crore) and the 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.