Bloomberg reports this afternnon that Electrolux CEO Keith McLoughlin said that they have renewed talks with Daewoo Electronics Corp. about potentially buying the bankrupt South Korean appliance maker.
“We have just reengaged conversations with them,” McLoughlin told Bloomberg in a telephone interview. “We’re trying to get information to assess the situation. We’ve been interested in this property from the beginning, and we’re still interested.”
Daewoo Electronics’ creditors last year agreed to an offer from Entekhab Industrial Group over a competing one from Electrolux. The Entekhab deal collapsed last month after the Iranian company failed to make the full payment of 578 billion won ($530 million). Creditors sent a letter to Electrolux on May 31, asking the Stockholm-based company if it’s interested in buying Daewoo, a spokesman for the main creditor Woori Bank said last week.
Acquisitions play a key role in Electrolux’s global growth strategy. Electrolux is the the world’s largest appliance maker after Whirlpool is focusing on growth under McLoughlin, who took over as CEO at the start of the year, after several years of targeting savings by moving production to low-cost countries under predecessor Hans Straaberg.
Electrolux has yet to decide whether to place a new bid on Daewoo, McLoughlin said.
Daewoo’s creditors have searched for a decade for a buyer of the former unit of Daewoo Group. The group was once South Korea’s largest conglomerate before it collapsed in 1999.
The Swedish maker of such products as Frigidaire refrigerators and AEG ovens aims to close its pending acquisition of Egyptian appliance maker Olympic Group Financial Investments (OLGR) this year, he said.
“We still feel very good about them as a company, as a strategy and as a business,” he said.
Electrolux earlier today said it will raise prices in Europe by 5% to 7%, starting in October to counter rising raw-material costs. The company’s costs for materials such as steel, resins and plastics may rise 2 billion kronor this year, McLoughlin said, reiterating an earlier forecast.
“These dramatic increases in cyclical commodities have to make their way through the market place,” McLoughlin said. “Even though we have seen increased price pressure in the first part of 2011, we’re confident we can pass this through.”
McLoughlin also maintained his forecast from April that the European appliance market will grow 3 percent this year, and that the U.S. appliance market will gain 3 percent to 5 percent. In the U.S., the growth may be “closer to the lower part of the range as April was somewhat weaker than expected,” he said.