T C L TA K E S O V E R T H O M S O N 85 merger broke, Thomson's share price gained 14 percent and closed at a new high for the year. TCL's shares gained 24 percent, closing at a three-year high. How the Deal Played Out With Boston Consulting and Morgan Stanley advising TCL and McKinsey and ABN Amro advising Thomson, the $560 million joint venture, TCL Multimedia Technology, would take a majority stake (67 percent) and Thomson Holding would retain the remain- ing 33 percent. TCL would appoint two-thirds of the board and Thomson one-third. TCL would nominate the CEO, the CFO, and the head of the China business unit, while Thomson would nomi- nate the heads of the European and North American operations and the deputy CFO. Under the agreement, both companies would transfer their respective television assets to TTE. Thomson would transfer to TTE the majority of its manufac- turing and sales of TV sets (including its television-manufacturing facilities in Mexico, Poland, and Thailand and some R&D facilities). This amounted to nearly 60 percent of Thomson's consumer prod- ucts division. TCL would transfer to TTE its television and DVD manufacturing, R&D, and sales network in China, Germany, and Vietnam. Both companies would also contribute cash--70 mil- lion from Thomson and 140 million from TCL. Li realized that the plants Thomson was offering him were costly, inefficient, and behind the times, but he decided that the deal would be worth it if it could open European and U.S. markets to TCL's products. The pre-acquisition study showed that sourcing cheap parts from China and tightening up the supply chain would greatly reduce costs. The cloud on the horizon was the deal's enor- mous complexity when it came to defining the three things Li wanted the most: TTE's access to brands, intellectual property, and Thomson's sales network. American Management Association / www.amanet.org