Iranian firm buys Daewoo Electronics
South Korea's Daewoo Electronics has signed a final deal to sell the company to an Iranian firm, Entekhab Industrial Group, Press TV reported.
The Iranian white goods distributor is set to buy South Korea's troubled Daewoo Electronics in a deal worth $520m.
For Daewoo's creditors, Entekhab's arrival offers a welcome exit after three failed purchase attempts over the past eleven years and 1,500 employee redundancies after the Daewoo conglomerate collapsed under the weight of its debts.
According to mergermarket data, the proposed deal is the first since 2004 where a Middle Eastern company has bought a Korean counterpart.
In spite of its domestic turmoil, Daewoo has managed to remain a premium brand in Middle East, and Entekhab, the major distributor of Daewoo products in the Middle East, expects to increase sales in Turkey, North Africa, and Eastern Europe.
The deal was announced by Daewoo's leading creditor, Woori Bank, on Monday.
The search for a buyer was resumed earlier this year and Entekhab, the main distributor of Daewoo appliances in the Middle East since 2008, was chosen as the preferred bidder in April. Entekhab Industrial Group has recently been given three months to pay for its stake leading to the finalization of the outlined deal.
Swedish giant Electrolux, which was named as the reserve bidder in case the deal with Entekhab fell through, subsequently looked elsewhere for exposure to the Middle East, announcing a deal last month worth $480m for an Egyptian white goods manufacturer.
Entekhab's purchase price is well below the $750 million price that Videocon and Ripplewood had agreed to pay before the financial crisis, but above the $265m-$450m range suggested by local media in March.