Failure in Stake Selling

Dongbu Daewoo Electronics in Malaysia.
Dongbu Daewoo Electronics in Malaysia.

 

A Korean media outlet reported on May 17 that Dongbu Group had planned to sell a 49.4 percent stake in Dongbu Daewoo Electronics to Aucma, a Chinese electronics maker but the plan was virtually shattered.

The media company quoted the investment bank (IB) industry news as saying that Aucma recently expressed its intention not to acquire Dongbu Daewoo Electronics' stake the Dongbu Group. "Aucma seriously considered acquiring the stake but decided to focus on business cooperation instead of stake acquisition,” the media company said. “We are discussing technical support and sales cooperation in the refrigerator business with Dongbu Daewoo Electronics."

However, "Negotiations with Aucma are underway in China regarding the acquisition of the stake," the Dongbu Group said. “The 49.4% stake of Dongbu Daewoo Electronics, which the Dongbu Group wanted to sell off to Aucma was handed over to financial investors which gave financial support to the Dongbu Group when the group took over Daewoo Electronics in 2013.

As the deal fell through, the Dongbu Group has to look for new investors to reimburse financial investors. The Dongbu Group signed an MOU with Jabez Partners, a Korean private equity fund management company, last month to draw investment in Dongbu Daewoo Electronics.

Financial investors forecast that the Dongbu Group will sell off the remaining a 50.4-percent stake in Dongbu Daewoo Electronics in a lump in addition to the 49.4-percent stake. If the Dongbu Group sells off the stakes, the group will lose control of Dongbu Daewoo Electronics.

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