Iran’s largest consumer electronics maker Entekhab Industrial Group is moving a step closer to own South Korean home appliances maker Dongbu Daewoo Electronics Corp. in its second attempt to buy the smaller Korean rival in less than a decade.
According to multiple sources from the investment bank industry on Monday, Dongbu Daewoo Electronics’ financial investors and lead advisor NH Investment & Securities Co. selected a consortium led by Entekhab and Korean private equity fund Whale Investment as the preferred bidder for the cash-strapped Korean electronics maker. Following the latest development, the consortium will be given exclusive rights to negotiate terms to buy Dongbu Daewoo Electronics.
Entekhab is Iran’s largest home appliances manufacturer that operates about 200 stores across eight major cities in the Middle Eastern country. It was the second time for the Iranian electronics giant to attempt to buy the Korean electronics maker. In 2010, Entekhab was chosen as the preferred bidder for Dongbu Daewoo Electronics but negotiations fell through in the end. This time, Entekhab is known to have competed against Turkey’s Vestel in a tight race.
KTB Private Equity, SBI Investment and other financial investors of Dongbu Daewoo Electronics have been seeking to sell a full stake in the company by exercising their drag-along rights, which allow majority stakeholders to force remaining minority shareholders to join in the sale. Industry sources expect the sale to be worth around 200 billion won ($188 million).
Financial investors’ decision to sell their stakes in Dongbu Daewoo Electronics comes after Dongbu Group, which took over the home electronics company in 2013 with financial investors, failed to meet management targets that include carrying out an initial public offering and maintaining certain level of net assets. Financial investors secured the drag along rights that enable them to sell shares owned by Dongbu Group to a third party if targets are not met.
Of 1.54 trillion won in sales raised by Dongbu Daewoo Electronics in 2016, more than 80 percent were generated from overseas markets where it manages 40 networks including subsidiaries and manufacturing facilities. Dongbu Daewoo Electronics’ core products are refrigerators, washing machines, microwaves, and vacuum cleaners. The Central and South America region accounts for about 35 percent of its total exports.
With the addition of Dongbu Daewoo Electronics that has built extensive networks across the world, Entekhab hopes to enhance its competitiveness in the Middle East and other overseas markets.
By Chun Gyung-woon and Lee Eun-joo
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]