Dayou Group to acquire Dongbu Daewoo Electronics

By Jun Ji-hye

Mid-size conglomerate Dayou Group is moving to become the nation’s third-largest home appliance manufacturer by buying a majority stake in Dongbu Daewoo Electronics.

The group had already taken over the domestic-focused home appliance maker Dayou Winia, known for its Dimchae kimchi refrigerator, in 2014. Kimchi is the country’s traditional staple side-dish.

By owning Dayou Winia and Dongbu Daewoo Electronics, whose yearly sales together are about 2 trillion won ($1.8 billion), the group will become the No. 3 home appliance maker here after Samsung Electronics and LG Electronics. Originally, it focused on making automobile parts.

The acquisition of Dongbu Daewoo will also raise the group’s competitive power overseas as the consumer electronics firm gets around 80 percent of its revenue from markets abroad, especially South America.

Dayou Holdings, a holding company for the group, recently signed a share purchase agreement (SPA) with financial investors in Dongbu Daewoo to buy an 84.8 percent stake in the electronics firm.

The holding company originally planned to buy a 100 percent stake, but for unknown reasons, Korea Securities Finance Corp., a financial investor, expressed its intention not to sell its 15.2 percent stake.

Industry sources said the group plans to complete the takeover by the end of the month, adding that it will sell its subsidiary Smart Savings Bank to finance the needed funds.

Earlier, Iranian electronics manufacturer Entekhab was selected as a preferred bidder for the takeover worth an estimated 200 billion won. But the contract fell through due to differences in opinion between the Iranian company and Dongbu stockholders regarding price and conditions.

Dayou Group actively participated in the bidding, hoping to expand into new markets.

Dayou Winia specializes in air conditioners and dehumidifiers as well as refrigerators for kimchi, which account for about 65 percent of the firm’s total revenue. Due to characteristics of its representative goods used to store the Korean traditional food, the firm heavily depends on domestic market sales.

On the other hand, Dongbu Daewoo Electronics is an export-oriented home appliance provider specializing in small- and mid-sized products such as microwaves and washing machines.

“It remains to be seen how Dayou Group will manage Dayou Winia and Dongbu Daewoo Electronics together, but the group can surely expect win-win effects by owning the two firms,” an industry source said.

The group is expected to maintain the operations of the two home appliance providers separately for the time being in an effort to minimize confusion among employees, sources added.