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For those of you who dont know Thomson is RCA. You know the maker of most of the tv's alot of us grew up watching.
Thomson Confirms Tubes Sale to Videocon
Tue Jun 28, 2005 01:02 PM ET
By Tim Hepher and Rosemary Arackaparambil
PARIS/BOMBAY (Reuters) - France's Thomson (TMS.PA: Quote, Profile, Research) on Tuesday confirmed the sale of its television tube operations to Indian group Videocon (VDCI.BO: Quote, Profile, Research) , virtually completing its exit from consumer electronics in favor of media services.
Thomson said it had sold tube plants employing 11,500 staff in China, Mexico and Poland to the diversified group for 240 million euros ($291 million), which it would reinvest in two Videocon units.
The deal, reported by Reuters on Monday, is the latest sign of growing interest among Asian firms in developing established brands to meet expanding consumer demand and hands Videocon a leading global position in TV tube manufacture.
For Thomson, the deal is practically the last milestone in its four-year transformation from a mainly consumer electronics firm, once so mired in problems that the French state tried to flog it off for one symbolic franc in 1996.
Privatized in 1999, Thomson sold its Italian tube business, also to Videocon, four months ago and sold its TV assembly business to Chinese company TCL (1070.HK: Quote, Profile, Research) in 2004.
After a strategic makeover by Thierry Breton -- who went on to France Telecom (FTE.PA: Quote, Profile, Research) and is now finance minister -- and current chief Frank Dangeard, Thomson has forged a core business based on post-production and other services to Hollywood and media customers.
Such non-consumer areas made up some four fifths of Thomson's revenues before the Videocon deal compared with about one fifth in 2000.
Only a small video glass plant in France remains from Thomson's displays business, which sells a total of 19 million color picture tubes a year, according to company data.
After rising initially, Thomson shares slipped around 0.5 percent to 20.39 euros on what brokers said remains a patchy outlook for the rest of the year and a higher-than-expected restructuring charge.
CIRCULAR DEAL
The deal, which carries the hallmark of ex-investment banker Dangeard, has an unusual circular structure that effectively pays Thomson with Indian energy shares -- even as it boasts of success in removing distractions from its core media focus.
The tubes activities will be transferred to Videocon free of net cash or debt at their estimated book value of 240 million euros, roughly in line with analysts' estimates.
Thomson will then pump the same amount into two listed Videocon companies in return for shares and an option to get out after three years -- 225 million euros in Videocon Industries, which is mainly in the energy sector, and 15 million in Videocon International, which makes low-end television and audio products.
The distraction did not bother Dangeard, whose aides say a three-year lock-up in a buoyant energy sector is a price worth paying for offloading assets the company no longer wants.
"Videocon is a very good asset; they are going global and they need support, and we have decided to support them," Dangeard told a news conference in Delhi where the deal was signed.
Thomson will hold about 14 percent of each subsidiary.
Videocon expects to emerge as one of the world's largest makers of color picture tube and glass, including its own current expansion of capacity to 24 million pieces per year from 17 million.
It has alliances with two other players in India to make 5 million color picture tubes.
Videocon said it expected to spend $500 million on all these plans for the color picture tube and glass businesses and will tap the markets for debt or equity to fund the investment.
Group Chairman Venugopal Dhoot said last week it planned to set up a $100 million glass and picture tube factory in Jordan.
Thomson has written off 250 million euros in cash costs to pay for quitting the loss-making television tubes activities as part of a wider set of provisions.
But in a surprise additional move, Thomson said it would take another 70 million euros in charges related to the disposal, without providing details.
Bombay shares in Videocon International (VDCI.BO: Quote, Profile, Research) closed up 0.9 percent at 68.5 rupees after rising as much as 5.3 percent. Videocon Appliances (VDCA.BO: Quote, Profile, Research) , which makes washing machines and refrigerators, rose 4.6 percent to 26.1 rupees.
Energy company Videocon Industries (VEDI.BO: Quote, Profile, Research) ended down 1 percent at 445 rupees, even though Thomson is set to invest in it. The energy company does not have equity in the offshore company buying Thomson's color picture tube business.
Thomson Confirms Tubes Sale to Videocon
Tue Jun 28, 2005 01:02 PM ET
By Tim Hepher and Rosemary Arackaparambil
PARIS/BOMBAY (Reuters) - France's Thomson (TMS.PA: Quote, Profile, Research) on Tuesday confirmed the sale of its television tube operations to Indian group Videocon (VDCI.BO: Quote, Profile, Research) , virtually completing its exit from consumer electronics in favor of media services.
Thomson said it had sold tube plants employing 11,500 staff in China, Mexico and Poland to the diversified group for 240 million euros ($291 million), which it would reinvest in two Videocon units.
The deal, reported by Reuters on Monday, is the latest sign of growing interest among Asian firms in developing established brands to meet expanding consumer demand and hands Videocon a leading global position in TV tube manufacture.
For Thomson, the deal is practically the last milestone in its four-year transformation from a mainly consumer electronics firm, once so mired in problems that the French state tried to flog it off for one symbolic franc in 1996.
Privatized in 1999, Thomson sold its Italian tube business, also to Videocon, four months ago and sold its TV assembly business to Chinese company TCL (1070.HK: Quote, Profile, Research) in 2004.
After a strategic makeover by Thierry Breton -- who went on to France Telecom (FTE.PA: Quote, Profile, Research) and is now finance minister -- and current chief Frank Dangeard, Thomson has forged a core business based on post-production and other services to Hollywood and media customers.
Such non-consumer areas made up some four fifths of Thomson's revenues before the Videocon deal compared with about one fifth in 2000.
Only a small video glass plant in France remains from Thomson's displays business, which sells a total of 19 million color picture tubes a year, according to company data.
After rising initially, Thomson shares slipped around 0.5 percent to 20.39 euros on what brokers said remains a patchy outlook for the rest of the year and a higher-than-expected restructuring charge.
CIRCULAR DEAL
The deal, which carries the hallmark of ex-investment banker Dangeard, has an unusual circular structure that effectively pays Thomson with Indian energy shares -- even as it boasts of success in removing distractions from its core media focus.
The tubes activities will be transferred to Videocon free of net cash or debt at their estimated book value of 240 million euros, roughly in line with analysts' estimates.
Thomson will then pump the same amount into two listed Videocon companies in return for shares and an option to get out after three years -- 225 million euros in Videocon Industries, which is mainly in the energy sector, and 15 million in Videocon International, which makes low-end television and audio products.
The distraction did not bother Dangeard, whose aides say a three-year lock-up in a buoyant energy sector is a price worth paying for offloading assets the company no longer wants.
"Videocon is a very good asset; they are going global and they need support, and we have decided to support them," Dangeard told a news conference in Delhi where the deal was signed.
Thomson will hold about 14 percent of each subsidiary.
Videocon expects to emerge as one of the world's largest makers of color picture tube and glass, including its own current expansion of capacity to 24 million pieces per year from 17 million.
It has alliances with two other players in India to make 5 million color picture tubes.
Videocon said it expected to spend $500 million on all these plans for the color picture tube and glass businesses and will tap the markets for debt or equity to fund the investment.
Group Chairman Venugopal Dhoot said last week it planned to set up a $100 million glass and picture tube factory in Jordan.
Thomson has written off 250 million euros in cash costs to pay for quitting the loss-making television tubes activities as part of a wider set of provisions.
But in a surprise additional move, Thomson said it would take another 70 million euros in charges related to the disposal, without providing details.
Bombay shares in Videocon International (VDCI.BO: Quote, Profile, Research) closed up 0.9 percent at 68.5 rupees after rising as much as 5.3 percent. Videocon Appliances (VDCA.BO: Quote, Profile, Research) , which makes washing machines and refrigerators, rose 4.6 percent to 26.1 rupees.
Energy company Videocon Industries (VEDI.BO: Quote, Profile, Research) ended down 1 percent at 445 rupees, even though Thomson is set to invest in it. The energy company does not have equity in the offshore company buying Thomson's color picture tube business.