Videocon likely to bid for Motorola’s mobile phone biz

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Apr 1: Videocon Group may offer to buy Motorola Inc’s mobile-phone business as it prepares to start wireless services in a market set to become the second-biggest in the world.

The closely held group is in the initial stages of evaluating a bid, chairman Venugopal Dhoot said, declining to specify financial terms because they haven’t been determined yet.

Motorola’s unprofitable handset business has a value of at least $3.8 billion, according to Merrill Lynch & Co estimates, or five times Videocon’s failed bid for South Korea’s Daewoo Electronics Corp. An acquisition would give the Indian company entry to the mobile-phone market as the world’s third-largest producer after Nokia Oyj and Samsung Electronics Co.

“Videocon is looking for acquisitions, but Motorola seems like a bit of a stretch,” said Mahesh Patil, who oversees $800 million in stocks at Mumbai-based Birla Sun Life Asset Management Co, including Videocon shares. “The period of easy money is behind us and I think in this current environment, funding for this kind of deal may be difficult.”

Merrill’s estimated value of Motorola’s handset business is more than double the market value of Videocon Industries Ltd, the group’s listed company that failed last year to acquire Daewoo after creditors rejected a $711 million offer for the South Korean company.

Aurangabad-based Videocon owns oil exploration and television glass-tube manufacturing assets. A Videocon bid for Motorola’s division would follow Tata Motors Ltd’s agreement to buy Ford Motor Co’s Jaguar and Land Rover last month, underscoring the growing ambitions by Indian companies to acquire global brands.

“We are in consumer durables, we are in retail and we also have” mobile-phone licences in India, Dhoot said. “We are very, very interested.”