Dongbu set to take over Daewoo ElectronicsDongbu Group signed a contract to take over Daewoo Electronics yesterday, ending a decadelong search for a buyer for the country’s No. 3 electronics firm.
The group said its consortium inked the deal with Daewoo Electronics’ creditors to purchase the appliance maker for 272.6 billion won ($256.4 million).
The move comes five months after Dongbu Group was tapped as the preferred bidder of Daewoo Electronics, a former unit of Daewoo Group, one of Korea’s largest conglomerates before it collapsed in 1999.
Daewoo Electronics was one of the 12 affiliates of the defunct Daewoo Group that were subjected to a workout. As a result the company sold its semiconductor and defense businesses and simplified its businesses to center mostly on manufacturing consumer goods such as TVs, refrigerators, washing machine and air conditioners. As the company’s business stabilized, Daewoo Electronics’ creditors decided to put the company up for sale in October 2005. However, finding a buyer was not easy. The following year a consortium led by India’s Videocon and private equity fund Ripplewood showed interest, but the deal fell apart as the negotiating parties couldn’t reach an agreement on the price. Daewoo Electronics laid off 1,500 employees while selling off its car audio business.
It then went into another set of negotiations in 2007 with Morgan Stanley’s private equity arm. But this time the company’s labor union opposed the acquisition that broke the deal. The company laid off another 1,200 employees. In 2009 Iran’s Entech showed interest in buying Daewoo Electronics. The deal once again failed to follow through as Entech failed to clarify the details on how it would finance the purchase.
In August, media reports said Dongbu Group, Samla Midas Group and Sweden’s Electrolux AB submitted bids for the deal, valued at more than 300 billion won.
A winning bid was selected after five rounds of botched talks with potential buyers, including overseas companies and consortia such as Iran’s Entekhab Industrial and Morgan Stanley Private Equity.
With the acquisition, Dongbu Group Chairman Kim Jun-ki and the conglomerate’s electronics affiliates will hold a 51 percent stake, while financial investors will take the remaining 49 percent interest.
By Lee Ho-jeong [email@example.com]
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