Latest News
LG Invited 1.6 billion USD Foreign Capital, Sold 50% Share to Phillips
2001-01-12
The LG Corporation sold 50% of its LCD business to Phillips and invited US$ 1.6 billion in foreign capital. US$ 1.6 billion is the largest influx of foreign capital generated by selling off a portion of a single company in Korea''''s history.
Both companies signed, on last 18th, on the memorandum of understanding with the above contents. The new joint entity will be launched this August after signing on the final contract at the end of next month.
Procedures for obtaining Foreign Capital
The alliance will be carried out in such a way that Phillips will purchase new stock (common shares) issued by LG LCD and secure the same amount of share portion. LG Electronics Inc. is currently keeping 98.8% of LG LCD shares.
US$ 1.6 billion drawn from Phillips will go under an actual inspection by the end of June. All amounts will be paid in cash at the end of July when the final contract is completed. Therefore, the new alliance entity will officially start business from this August. The new company will be managed by the Board of Directors composed of 3 members each from LG and Phillips.
Its Meaning and Prospect
The alliance with LG Electronics Inc. and Phillips (implemented through selling shares of LG LCD), the global electronic appliances manufacturer, is considered as having an important meaning from the perspective of competition strategy of the highly technical electronic industry including LCD''''s. The alliance will provide an opportunity for Korea to have absolute superiority in the leading-edge LCD industry, because a synergy effect will be generated when the world-class technology of LG LCD is combined with the market reputation and distribution network of Phillips.
LG LCD and the new alliance plan to take the initiative in the LCD monitor and LCD TV market, which is expected to grow sharply from the year 2000, by expanding its production capability through a 1,400 billion won investment in the future.