Videocon-RHJ Consortium Emerges As Top Bidder for Daewoo
A consortium that includes RHJ International and India’s Videocon Industries emerged Fri. as the lead bidder for Daewoo Electronics, in a deal valued at about $700 million. Woori Bank, among Daewoo’s top creditors, named Videocon and RHJ -- the holding company for private equity firm Ripplewood and the majority owner of D&M Holdings -- as the preferred bidder, with private equity fund MBK Partners being held in reserve.
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A sale would cap a months-long process in which a S. Korean banking consortium led by Woori sought a buyer for Daewoo. Five firms were said to have bid Aug. 17. Woori has hopes of signing a preliminary agreement with the Videocon- RHJ consortium this month, it said. In 2002, the banks bought a 97.8% stake in Daewoo from parent Daewoo Group. Daewoo, which in 1996 made a stab at buying Thomson, fell into bankruptcy in 1999, with $78 billion in debt.
If it flies, the purchase will expand RHJ’s CE holdings. RHJ was set up in March 2005 by Ripplewood as a publicly traded holding company for its investments in Japanese firms, including D&M Holdings. The acquisition would be the 2nd in less than 2 years for TV and appliance maker Videocon. Last year, it bought Thomson’s TV tube plant in Agagni, Italy, for $291 million (CED Feb 1/05 p1), and also the Indian subsidiary of Electrolux for $76 million.
Unclear at deadline Fri. was the sale’s potential impact on Daewoo N. American operations. Daewoo, which has an hq in Lyndhurst, N.J., assembles CE products and major appliances at a plant in San Luis Rio Colorado, Mexico. RHJ and Daewoo officials weren’t available for comment. It’s conceivable the sale would give D&M, via its RHJ connections, a possible N. American assembly source for its brands.
Daewoo’s assets totaled $1.72 billion at the end of 2005. Besides flat-panel and CRT-based TVs, Daewoo markets DVD/VCRs, portable DVD players, refrigerators and air conditioners. It emerged last fall as one of several suppliers for private label TruTech products sold at Target (CED Dec 5 p4). Daewoo swung to a $98.2 million net loss in 2005 from a $31.7 million net profit in 2004, according to the company’s audit report. Sales were $2.26 billion last year.
Before spinning off RHJ, Ripplewood was a majority owner in D&M, a stake it acquired in a 2002 merger of Denon and Marantz. Ripplewood spun off Denon from Nippon Columbia a year earlier.