Entekhab Threatens To Pull Business, Take Legal Action Over Failed Daewoo Deal
Jun 3, 2011
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Iranian appliance maker Entekhab Group, in a statement reported by Reuters, threatened to pull its distribution business from appliance maker Daewoo and take legal action against Daewoo shareholders after the shareholders pulled out of an agreement to sell Daewoo to Entekhab. Shareholders pulled out of the agreement after Entekhab failed to come up with a way to pay for the acquisition.
Entekhab called the actions of Daewoo shareholders illegal but did not make clear its grounds for the claim. Daewoo said in a Reuters report that Entekhab business accounted for about 5% of its revenue last year, but would not give further comment on the potential financial impact should Entekhab make good its threat to cut business ties. Entekhab distributes Daewoo appliances in Iran.
In statements reported by the Iranian Students News Agency, Entekhab appears to hold Daewoo shareholders responsible for coming up with a solution – one that will give Daewoo to Entekhab in the end. Daewoo shareholders have not responded.
As has been reported in ApplianceMagazine.com news, most recently on June 1, shareholders of Korean appliance producer Daewoo have been trying for years to sell the company. Bidding in 2010 resulted in two top contenders, Entekhab and Electrolux. Eventually shareholders chose Entekhab, which makes appliances in Iran under brand names Bost and Snowa as well as selling Daewoo appliances.
But Entekhab failed to recruit investors and couldn't get funding in place for the Daewoo acquisition by the February 2011 deadline, or by a second deadline in April. A Reuters source said Entekhab wanted Daewoo shareholders to cut their price by about $55 million. Earlier this week, Daewoo shareholders indicated they would no longer pursue the deal with Entekhab and would restart talks with Electrolux.
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