If Videocon loses bid, blame it on Thomson

If the Videocon-Daewoo deals fails to take shape as envisaged, history will repeat itself for Daewoo which had failed in its earlier bid to acquire Thomson.

In 1996, Bae Soon-hoon, chairman, Daewoo Electronics was keen to take over Thomson Multimedia. Then Daewoo was a showpiece of South Korean chaebol power.

However he could not formalise the relationship because of oppositions from the French. Both the socialists and the communists were up in arms and the issue rocked French parliament.

Not to mention labour unions who went on strike to block sale of French assets and of course, Thomson's intellectual property. The French privatisation commission blocked Daewoo's bid and the Daewoo group tied to cobble up an alliance with French partners to buy Thomson.

If Daewoo Electronics had acquired the French state-owned enterprise, Thomson, the company would have become a dominant player in manufacturing television sets, probably the largest, across the globe.

But the French delayed the deal citing reasons that the company should not be sold to a non-French enterprise. At present, the South Korean objection that Daewoo's sale to an Indian company may rob South Korea of its technological prowess is like a deja vu to 1996.

If the M&A negotiations between the two firms failed 10 years ago, the name of Videocon cropping up as the preferred bidder for Daewoo Electronics increased chances of the two companies coming under the same banner.

Because in 2005, Videocon had acquired French firm Thomson SA's color picture tube manufacturing business for $291 million.

The Daewoo acquisition would have meant that the Dhoots, owners of Videocon, could have played cupid to two companies that could not come together in 1996.

But Videocon is facing the same problem that Daewoo faced in France 10 years back. The Koreans have similar fears like the French.

On top of that, with the management of Daewoo Electronics saying on Tuesday that it may oppose its proposed acquisition by Videocon Industries unless the Indian company increases capital spending at South Korea's third-largest electronics maker to strengthen its competitiveness, this could be a relationship that was never meant to be.