Dongbu wraps up Daewoo Electronics purchase

Korean conglomerate Dongbu Group yesterday completed its acquisition of Daewoo Electronics and tapped a new chief for the country’s third-largest home appliance maker.

Following a board meeting and a shareholder’s meeting on Thursday, the group said it has nominated Lee Jai-hyong, the vice chairman of Dongbu Lightec and Dongbu LED, as the new head of Daewoo Electronics.

Daewoo Electronics CEO Lee Sung will remain in the company as its chief operating officer, according to the group.

In a press conference in Seoul, the new chief executive vowed to foster Daewoo Electronics as one of the world’s 10 biggest electronics firms by 2020 by focusing on the mid-low segment.

“The mid-low market is quite big in the global home appliance market. There is no need to enter the mid-high or premium market to compete with Samsung Electronics and LG Electronics,” said Lee.

Lee said the company plans to become a leading global player in the mid-low segment on the back of Daewoo Electronics’ extensive sales network and high brand awareness in emerging markets. The company will keep the “Daewoo” brand, he said.

The new chief executive also said the company plans to expand its product portfolio to TVs, air conditioners and LED lighting products, and later enter the market for medical devices.

As part of the plan, the company plans to inject 150 billion won ($139 million) to upgrade facilities and develop new products and beef up investments starting in 2015.

Lee also said the company anticipates to create synergy with the electronics affiliates of Dongbu. The conglomerate currently operates 60 business divisions, with some operating in the IT and electronics sectors.

Daewoo Electronics aims to reap an yearly operating profit of 300 billion won on revenue of 5 trillion won by 2017. Last year, the company posted an operating profit of 130 billion won on a 1.9 trillion won revenue, staying in the black for the fifth straight year.

Dongbu, meanwhile, has paid 228 billion won of the 272.6 billion won deal. The remaining 44.6 billion won is set to be paid by the end of March upon the group’s deal with financial investors.

When the remaining amount is paid, the group will control 50.6 percent of Daewoo Electronics, while financial investors will hold the remaining 49.4 percent stake.

The takeover marks an end to Daewoo Electronics’ quest to find a new owner after five rounds of botched talks with potential buyers, including overseas firms and consortia such as Iran’s Entekhab Industrial and Morgan Stanley Private Equity.

Yonhap