Sewon Telecom becomes second largest cellphone producer

Sewon acquires Maxon Electronics and ranks high below big-time cellphone manufacturer, Samsung

by Kim Dong-ho

4 July 2000 (JoongAng Llbo) - Sewon Telecom, a cellular phone manufacturer has listed on the KOSDAQ, acquired Maxon Electronics, a bigger firm listed on the Korea Stock Exchange.

On July 3rd, creditor banks of now insolvent Maxon Electronics, with Korea First Bank holding the lion's share of Maxon's outstanding loans, stated that they had divested themselves of 28 million shares in Maxon through an investment conversion with Sewon Telecom paying 60 billion won ($54 million). As a result, Sewon Telecom has a controlling 60 percent interest in Maxon Electronics.

This is the first time that a firm listed on the tech-heavy KOSDAQ has acquired a company listed on the Korea Stock Exchange. Also, Sewon Telecom has set another precedent beating out LG Information and Communications in taking over Maxon due in large part to Maxon's creditor banks looking more favorably at Sewon Telecom's proposals for takeover.

What is more surprising is that Sewon Telecom used little money of its own in acquiring Maxon. It had succeeded by attracting overseas investment capital in its bid to take over Maxon, easily finding investors by simply underlining Sewon's growth potential in the domestic mobile phone market. In the end, the 60 billion won needed to purchase controlling interest in Maxon was almost completely funded with the money of overseas investors effectively allowing Sewon to acquire Maxon Electronics without using any of its own capital.

With this acquisition, Sewon Telecom's manufacturing capacity will jump to a potential production volume of 8 million phones per annum, catapulting it to being the second-largest manufacturer on the Korean peninsula after tech-giant Samsung Electronics. Furthermore, starting in the latter half of this year, the company has already planned to supply mobile phones using CDMA (Code Division Multiple Access) and GSM (Global Service for Mobile Communications) systems to a mobile telecommunication firm servicing Europe and South America to the tune of $700 million in sales for the next three years. And, even with the Korean government's recent move to do away with subsidies to mobile phone manuafacturers and telecommunications firms, Sewon's growth potential in the domestic marketplace is expected to make its backers smiling all the way to the bank.

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