In a bid to become a key player in mobile handsets and electronic devices, consumer electronics major Videocon Industries has moved to acquire Finnish electronics manufacturer Elcoteq, which makes mobile phones, set-top boxes and flat panel televisions. Elcoteq said on Friday it has signed a non-binding ‘Letter of Intent’ with Videocon "to finalise a potential definitive transaction agreement." No financial or stake details were given.
Elcoteq said its board had authorised the management to proceed with due diligence and contract negotiations with Videocon. “The parties are aiming at a rapid process to conclude the negotiations and sign the Agreement. The transaction is expected to close by the end of the year,” the statement said.
Reuters quoted Elcoteq's Chief Financial Officer Mikko Puolakka as saying, "(The size) is more or less the same as the previous announcement — 50 million euros ($72.7 million, Rs 375 crore),” adding Elcoteq aimed to end negotiations as soon as possible and close the deal by the end of the year. "Our market cap is around 30-40 million euros, so the investment must entail certain control over the company," Puolakka said.
Videocon Industries' chief executive officer KR Kim told Hindustan Times that he was not aware of the transaction. Officials at Videocon’s corporate office, controlled by the Dhoot family, could not be reached.
Elcoteq is expected to give a fillip to the Indian company's growth plans in the area of wireless technologies.
Videocon group has revenues of around Rs 15,000 crore, majority of which come from consumer durables business and the rest from oil and gas.