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Report: Ripplewood-Daewoo Electronics deal falls apart

Daewoo's creditors have opted to restructure the company rather than sell it. It marks the third failed attempt to sell the embattled electronics maker to a private equity group since Ripplewood first tried to buy the company in 2006. A deal with Morgan Stanley's Asian private equity arm fell apart last year.

New York-based Ripplewood Holdings has for the second time seen its deal fall apart to acquire Korean home appliance maker Daewoo Electronics. Creditors of Daewoo Electronics ended talks to sell the Korean company to Ripplewood, Reuters reported.

“The talks were discontinued last month,” an official at one of the creditor banks said, adding that the creditors will “look for ways to normalise Daewoo through restructuring”.

In October 2008, Ripplewood was chosen as the winning bidder for the company. Leading creditor Woori Bank said at the time that the US private equity firm was preferred over a consortium of Diligant Systems and Russian investors. It also said then that the deal was expected to close before the end of 2008.

This is the second time that Ripplewood has failed to acquire the troubled Korean electronics manufacturer. In 2006, a partnership comprising of Ripplewood and Videocon Industries, an Indian electronics manufacturer, had been selected as buyers for the company in a deal estimated to be in the range of $740 million, but that deal fell through due to disagreements over price.

In February 2008, Morgan Stanley Private Equity Asia, the Asian private equity arm of the US investment bank, was picked as the preferred bidder for Daewoo Electronics following an auction process that began in late 2007. However, in August last year, MSPE Asia pulled out of the deal, reportedly due to disputes with the company’s labour union.

Daewoo Electronics, whose primary products include televisions and refrigerators, is Korea’s third largest consumer electronics manufacturer. It was a part of the erstwhile Korean conglomerate Daewoo Group, which went bankrupt and collapsed in 1999 in the aftermath of the Asian financial crisis.

Ripplewood Holdings is presently raising a $4 billion US-focused fund.