Reports: Electrolux Acquisitions of Olympic and Daewoo in the Works
Jun 22, 2011
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Media reports in Egypt and Korea indicate that Electrolux will close on its acquisition of Egyptian appliance maker Olympic within a month and has today made an offer to purchase Korean appliance maker Daewoo for $530 million.
Electrolux should make the acquisition of Egyptian appliance maker Olympic Group official within a month, according to quotes from Olympic's Chief Financial Officer Hossam El Mestikawi in Egypt's Al Mal newspaper. The quote was reported by Reuters on June 22.
Electrolux signed a preliminary agreement with Paradise Capital to acquire 52% of Olympic Group back in October of 2010. The acquisition was delayed for months during the demonstrations and transition of government in Egypt.
A Korea Times article posted on June 22 said Electrolux had made an offer of $530 million for Daewoo.
Electrolux was one of two top bidders for Daewoo when shareholders auctioned it a year ago. Shareholders chose Iran's Entekhab Industrial Group as the winning bidder. Entekhab failed to organize funding for the acquisition by the February 2011 deadline, or by a second deadline in April 2011.
Most reports indicate Entekhab originally agreed, in mid-2010, to pay $518 million for Daewoo. After missing its second funding deadline in April 2011, Entekhab reportedly asked shareholders to cut their price by about $55 million.
In late-May, Daewoo shareholders indicated they would no longer pursue the deal with Entekhab and would restart talks with Electrolux.
In early June of 2011 Entekhab claimed in Iranian Students News Agency statements that canceling the agreement to sell Daewoo to Entekhab was illegal. Entekhab statements implied that the onus was on Daewoo shareholders to come up with a financial arrangement that would enable Daewoo's acquisition by Entekhab.
The source quoted in today's Korea Times article said that, based on its failure to provide a funding plan, "We don’t think Entekhab will take legal action."
Entekhab also threatened to cut its ties with Daewoo. 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 along with its own appliance brands.
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