Videocon in Rs 1,280 cr deal

Acquires Thomson's CPT business.

The Videocon Group today announced that it will acquire the Colour Picture Tubes (CPT) manufacturing business of Thomson SA for ¤240 million (about Rs 1,280 crore).

In a parallel development, Thomson SA has agreed to invest an identical sum of ¤ 240 million in equity shares of the Videocon group.

It will buy a limited strategic equity interest in Videocon International Ltd to the extent of Rs 80 crore (¤15 million) as well as subscribe to Videocon Industries Ltd's global depository receipts (GDR) up to Rs 1200 crore (¤225 million) at $10 per GDR. One GDR represents one underlying domestic share. Videocon Industries is the group's oil and gas venture.

This infusion will give Thomson a 14 per cent stake in Videocon Industries and about 12 per cent in Videocon International.

The agreements were signed today in New Delhi in the presence of Finance Minister P Chidambaram and French Ambassador to India Dominique Girard.

The acquisition will give Videocon new CPT manufacturing capacity of 19 million a year "" translating into ¤ 850 million in annual sales "" spread over Poland, Mexico, China, along with R&D facilities in Europe and China. Along with its existing 17-million capacity in India, being expanded to 24 million, this acquisition will make Videocon the fourth largest CPT maker in the world after Matsushita, Samsung and Philips.

The turnover of the Videocon group, after integration of Thomson's oprations, is projected to rise to Rs 17,500 crore ($4 billion) with about Rs 8,700 ($2 billion) coming from overseas.

Overall, the Videocon group plans to invest at over $ 500 million in acquiring the media services, equipment & technology division and the entire ownership of Thomson's colour picture tube related business interests which have manufacturing facilities in Poland, Mexico and China.

It plans to fund this by accessing domestic/ international debt/equity markets at an appropriate time on stand-alone basis, a statement said.

The board of directors of Videocon Industries has also been authorised to issue additional equity shares up to an aggregate amount of Rs 2,000 crores in domestic/international market in one or more tranches.

The acquisition also includes full-fledged R&D facilities in Europe and China along with access to a large resource of the patents and IPRs relating to the most basic technologies in CPT segment. Except one facility in China, which has the local Chinese government as a minority shareholder, all units are wholly owned by Thomson.

Last week the company had agreed to set up a colour picture tube unit in Jordan with an investment of $100 million. The company has manufacturing presence in Muscat, China and Korea.

Videocon Industries shares closed at Rs 448.50 on the Bombay Stock Exchange today, marginally down by 0.26 per cent compared to the previous closing price.