Dayou Group buys Daewoo Electronics

Dayou Group completed its acquisition of Dongbu Daewoo Electronics on Wednesday with the goal of making the appliance maker the country’s third-largest electronics company after Samsung and LG.

With the acquisition, Dongbu Daewoo Electronics is reverting to its former name Daewoo Electronics. Prior to Wednesday, Dongbu Group owned the appliance maker after acquiring it from creditors in 2013.

Dayou bought an 84.5 percent share of Daewoo Electronics jointly owned by Dongbu and several investors through a special-purpose corporation. The price was not disclosed, though estimates put it at 120 billion won ($110 million).

The acquisition puts Dayou in a distant third in the Korean electronics market. In recent years, Dayou has been stepping up its presence in appliances. In 2014, it acquired Winia from the Korean auto parts maker Mando.

Dayou Winia is best known for its Dimchae line of kimchi refrigerators.

Now with Daewoo Electronics in its hands, Dayou hopes to fortify its electronics business at home and abroad through its extensive product portfolio and overseas sales network. Whereas Dayou Winia has a solid track record in the Korean kimchi refrigerator market, Daewoo Electronics manufactures refrigerators, televisions and washing machines, with strength in small wall-mounted washers.

And while Dayou Winia’s business is focused on the Korean market, about 75 percent of Daewoo Electronics’ earnings are from overseas markets thanks to localization strategies like halal washing machines and refrigerators with locks.

In a sign that Dayou Group is focusing on its electronics business, the company also signed an agreement Wednesday to sell its share of Smart Savings Bank to JS Asset Management for 78 billion won, with a deposit of 10 billion won.

Dayou plans to use the capital to secure liquidity and prop up operations at Daewoo Electronics, which had been teetering under Dongbu.

“We consider Daewoo Electronics and Dayou Winia as the group’s future growth engine,” a representative from Dayou said. “We will put efforts into creating synergies between the two companies by jointly purchasing electronics parts and cooperating in research and development.”

BY KIM JEE-HEE [kim.jeehee@joongang.co.kr]