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Daewoo arm heads for Videocon stable

Mumbai, Sept. 8: Videocon Industries has been picked as the preferred bidder to buy Daewoo Electronics for a reported price of $700 million. Videocon had formed a consortium with the US private equity fund Ripplewood Holding (RHJ International) to take over the third largest home appliance manufacturer of Korea.

Woori Bank, one of Daewoo’s leading creditors, named Videocon and RHJ International, the holding company of US buyout fund Ripplewood, as the primary bidder. South Korean private equity fund MBK Partners was a reserve bidder.

Videocon chairman Venugopal Dhoot refused to disclose details about the bid price citing a non-disclosure agreement.

“The acquisition of Daewoo will help Videocon Industries set a firm global footprint. However, the management will take a call on the strategy if we win the bid,” said Anirudh Dhoot, director, Videocon International. If successful, the deal would mark Videocon’s third major acquisition after Thomson and Electrolux in less than two years. In 2005, Videocon, which makes televisions, picture tubes and home appliances, acquired TV tube operations of France’s Thomson for $291 million and the Indian unit of Swedish firm Electrolux for $76 million.

Daewoo was put up for sale by its domestic creditors, who own 97.5 per cent of the unlisted firm. According to media reports, a Woori Bank official said the creditors aim to sign a preliminary deal with the Videocon consortium this month.

Five bidders, including one local investor and four foreign firms, had presented final bids for Daewoo on August 17. ABN Amro, Woori Investment and Securities Company and Samil PriceWaterhouseCoopers are managing the sale. The company was placed under a debt rescheduling programme after its parent group went bankrupt in 1999 and has since streamlined its business, focusing on televisions, air conditioning units and refrigerators.

Daewoo, which competes with other South Korean brands Samsung Electronics and LG Electronics, operates six plants in South Korea and 18 overseas units.

The company posted a 94 billion won net loss in 2005 from a net profit of 30.4 billion won in 2004, according to the company's audit report. Sales totalled 2.16 trillion won last year.

The scrip of Videocon Industries today ended 1.49 per cent higher at Rs 414.65 from yesterday’s close of Rs 408.55. The stock hit an intraday high of Rs 421.

According to a sector analyst, Videocon wants Daewoo Electronics for its brand power and cutting-edge technology for LCD and PDP TVs, front-loading washing machines and two-door refrigerators.

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