Mid-size conglomerate Dayou Group is on track to become the third largest home appliance manufacturer in South Korea as it is going to acquire a majority stake in Dongbu Daewoo Electronics, according to the industry on Sunday.

The group signed a stock purchase agreement with financial investors of Dongbu Daewoo on Friday after a heated competition with Turkey’s Vestel and Iran’s Entekhab for months to buy an 84.8 percent stake in the electronics firm.

The acquisition price hasn’t been confirmed yet, but it is said to be around 200 billion won ($184.4 million). 

Dayou plans to finance the needed fund by selling its subsidiary Smart Savings Bank due to its lack of funds. The group will also lend some from the current FIs of Dongbu Daewoo to cover the shortage.

For unknown reasons, Korea Securities Finance Corp., one of the FIs, decided not to sell its 15.2 percent stake in Dongbu Daewoo to Dayou.

Dayou already owns the domestic-focused home appliance maker Dayou Winia that produces kimchi fridges and air conditioners at affordable prices compared to premium products by Samsung and LG.

By taking over Dongbu Daewoo Electronics, Dayou plans to expand Dayou Winia’s presence through Dongbu Daewoo’s vast overseas sales network, according to the industry.

The group, however, is expected to maintain the operations of Dayou Winia and Dongbu Daewoo separately.

Dayou is planning to invest around 120 billion won in normalizing Dongbu Daewoo’s management within the year, while planning on a capital increase next year, some news reports said

By Song Su-hyun (song@heraldcorp.com)