Daewoo names Videocon top bidder

Videocon Industries today announced that a consortium comprising RHJ International SA, the holding company of the US private equity fund, Ripplewood, and Videocon has been named preferred bidders to acquire a controlling stake in Daewoo Electronics, by the Creditors Financial Institution Committee of Daewoo Electronics, Seoul, South Korea.

The announcement is significant, as it comes in the light of statements by senior Daewoo executives yesterday that the takeover would have no meaning, if Videocon did not commit significant capital investment in Daewoo to strengthen its competitiveness.

Videocon's announcement made to the Bombay Stock Exchange could be interpreted as an indicator that things are on track.

Videocon executives did not comment as the company is bound by a non-disclosure agreement.

According to news agency reports, Videocon executives are reacting to the statement attributed to Daewoo Electronics president Lee Seung-Chang when he spoke to the media yesterday.

Videocon executives are said to have taken up the matter with Daewoo Electronics, citing that even Daewoo is bound by the agreement of non-disclosure.

Daewoo Electronics has been put on the block by its creditors, including the Korea Asset Management Corporation (KAMCO) and Woori Bank.

Daewoo Electronics has been run by creditors since its parent, the Daewoo conglomerate collapsed under $80bn of debt in 1999 after the financial crisis. Since then, the electronics company has undergone a radical restructuring aimed at returning it to profit.

When Videocon completes the acquisition, which is estimated to be in the range of $ 700 million for a 97.6 per cent stake, it would be the biggest buyout ever by an Indian private sector company, overtaking Tata Tea's stake acquisition of Energy Brands Inc (Glaceau) last month for $ 677 million.

It would also give Videocon access to newer markets like Poland and Vietnam. Daewoo has the largest share in the Polish TV market and leads the Vietnamese refrigerator segment for the last three years.