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Consumer electronics maker Thomson announced that a definitive agreement has been reached for the disposal of its Cathode Ray Tube (CRT) activities in China, Mexico, and Poland to Indian appliance and consumer electronics maker Videocon.
The agreement is set in two parts. Thomson will receive a cash payment of 240 million euros (approx. U.S. $290 million) for its CRT activities, transferred on a debt and cash-free basis. Thomson has also agreed to invest 240 million euros (approx. $290 million) in two listed Videocon companies, 225 million euros (approx. $272 million) through a placement in Videocon Industries, a company mainly active in energy, and 15 million euros (approx. $18 million) in Videocon International. Following these private placements, Thomson will hold approximately 14 percent in each of the two Videocon companies.
The Videoglass activity at Bagneaux-sur-Loing, France, which had not been concerned by this disposal process, will benefit from a long-term supply agreement with the CRT business transferred. Thomson is currently examining various options regarding the future of this activity, with the objective of accelerating to 2005 its re-industrialization, which was originally set to run up to 2007.
The agreement is said to strengthen the international expansion strategy of Videocon, as it will allow it to develop its global manufacturing base through the integration of Thomson's four major Tube manufacturing plants (Foshan and Dongguan in China, Mexicali in Mexico, and Piaseczno in Poland) which together employ around 11,500 people.
The transaction, which is subject to the approval of the relevant regulatory authorities, is expected to close at the end of the third quarter 2005. Following the agreement, Thomson and Videocon intend to develop partnerships in the Indian market and internationally.
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