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Iran's Entekhab Group won the bidding war for the purchase of Korean appliance maker Daewoo Electronics, but failed to come up with the funding - or even a satisfactory plan for how it intended to get the funding – prompting Daewoo shareholders to cancel the deal altogether. Daewoo shareholders are expected to restart talks with Electrolux, which was runner-up in the 2010 bidding.
Appliance OEM Daewoo Electronics Corp. was once a part of South Korea's Daewoo Group, which went bankrupt in 1999. Daewoo Electronics has been owned by former creditors ever since. After several failed attempts to sell off the company, Sweden's Electrolux and Iran's Entekhab were selected as the preferred bidders for Daewoo in March 2010. In August 2010 Entekhab was named the winning bidder, reportedly agreeing to pay $518 million.
In November of 2010, personnel from Entekhab were posting to web site directory listings that they had begun the process of bringing Daewoo into the Entekhab corporate structure.
But Entekhab did not, in fact, have financing in place to make the purchase and couldn't generate sufficient interest from Iranian or international investors. When it failed to have funding in place by the early February 2011 deadline, Daewoo's owners extended the deadline for two months. When the April 7 deadline arrived, Entekhab still did not have the means to pay for the acquisition and, according to a Reuters source, even asked Daewoo shareholders to cut their price by about $55 million.
This week Daewoo shareholders finally decided to drop the deal with Entekhab.
If the deal had gone through it would have turned Entekhab from a regional Mid East appliance industry player into an appliance maker with global reach.
Electrolux CEO Keith McLoughlin told Bloomberg in February that Electrolux was still interested in talking with Daewoo creditors if the Entekhab deal fell through. Electrolux is also working out the details of the acquisition of Egyptian appliance maker Olympic.
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