The French government had been expected to sell Thomson SA to Alcatel Alsthom SA, so it sold it – for a nominal one franc – to Lagardere Groupe, the publishing giant that also owns Matra SA. The sale rockets Daewoo Electronics Co of Seoul, South Korea onto the world consumer electronics stage with such blue chip brand names as RCA, Ferguson and Thomson itself, because Lagardere had already agreed to sell the loss-making Thomson Consumer Electronics – with its Sun Microsystems Inc video on demand alliance – on to Daewoo. The market reaction was predictable, with the winner taking it in the share price while loser Alcatel’s shares soared. However the reverse was the case among shares of the respective partners – shares in GEC Plc fell heavily in London on Alcatel losing, but British Aerospace Plc shares were ahead on grounds that its partner Matra would now be strengthened by the addition of the big Thomson-CSF SA defense electronics major. Both British firms have many ties with each bidder so the balance of benefit is not clear-cut.French finance minister Jean Arthuis said Lagardere had been chosen to lay the symbolic one franc on the table because it had a better industrial plan than Alcatel. Lagardere plans to merge its Matra Defense Espace unit with Thomson-CSF to create Thomson Matra and has offered to buy out CSF minorities – 42% remains traded on the Paris Bourse – at 156 francs per share, $1.5bn all told. Thomson Matra will be 60% owned by Lagardere but will also be a quoted company. The prime minister’s office said Daewoo had agreed to preserve French jobs and create additional ones as part of the terms for its purchase of Thomson Multimedia. The state is going to recapitalize the company to the tune of some $2bn ahead of the sale and this will be deducted from the proceeds of the sale of the state’s shares. The government will retain a special share in Thomson SA to enable it to prevent national defense interests falling into unacceptable hands. Thom son-CSF will shed its 20% stake in SGS-Thomson Microelectronics NV under Lagardere, but it is not clear where this will go, although into other French hands is the intention. The sale is not completely cut and dried – the government will take a final decision after studying the privatization commission’s conclusions and legal opinion. This will be given after the European Commission has issued its findings on the aspects which are relevant to it, but the aim is to complete the sale before the end of the year. Meantime, Thomson Multimedia is expanding in the Far East, but in Singapore, not South Korea: its Thomson Multimedia Asia Pte Ltd announced it is to spend $38m on research and development at its Singapore plant for digital satellite television decoders and high-definition television sets.
