CHICAGO -- In the early 1950s, more than 90 American companies made television sets. Yesterday, the last American-owned television manufacturer, Zenith Electronics Corp., gave up its battle to survive on its own and agreed to sell a controlling interest to a South Korean industrial giant.
LG Electronics Inc., the South Korean manufacturer whose products sell under the Goldstar name, announced with Zenith that it would lift its stake in that company to 57.7 percent from the current 3.8 percent.
It will gain control by paying $10 a share, or more than $350 million, for a combination of new and already issued Zenith common stock. LG Electronics is a subsidiary of the LG Group, a conglomerate with $48 billion in annual revenues from electronics, telecommunications, oil and gas and financial services.
Zenith, which is based just north of Chicago in Glenview, was founded in 1918 as a radio manufacturer and in the years after World War II fought for leadership in the television industry against rivals RCA, General Electric, Magnavox and Motorola.
As competition from Europe, some of it government-subsidized, and from low-cost Asian manufacturers intensified, Zenith diversified into newer consumer electronics equipment like computers.
It also moved more production to Mexico and Asia to try to keep its prices low enough to meet consumer expectations of declining prices even as products became more advanced. But the company has reported losses for most of the last decade.
The deal, which preserves Zenith and its brand name, gives the company desperately needed money to expand and improve a Melrose Park, Ill., plant that makes picture tubes and is the company's last major American manufacturing plant. Those tubes are sent to Mexico, where the complete television sets are now assembled -- indeed, while Zenith was American-owned, it has less production in this country than many of its foreign rivals.
About $186 million of the cash LG is putting up will go toward buying shares from Zenith shareholders; the rest will go to Zenith for new shares and will be used primarily to upgrade the Melrose Park plant.