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| Hyundai BNG Steel CEO Chung Il-sun, left, and LG Hausys CEO Kang Gye Woong |
By Kim Hyun-bin
LG Hausys said in a filing to the Korea Exchange, Tuesday, that it had selected Hyundai BNG Steel as the preferred negotiator to acquire its automotive components and industrial film businesses.
"LG Hausys and Hyundai BNG Steel have signed a memorandum of understanding (MOU) under which the latter will proceed with due diligence to acquire LG's automotive parts and industrial film businesses as the status of top negotiator," according to the filing. The final contract is expected to be inked in March with a total price tag of around a few billion dollars.
Bank of America (BOA) will manage the relevant processes as the main financial adviser. The agreement came a few months after the LG affiliate said it was reviewing various scenarios to improve its corporate value. At the time, LG Hausys didn't specify the meaning of "corporate value."
The selloff coincides with the scheduled departure of five LG affiliates. Koo Bon-joon, a senior adviser to LG, will take over five affiliates that the group will dispose of ― LG Hausys, LG International, LG Pantos, LGMMA and Silicon Works in March.
Kpp is the third son of the late Honorary Chairman Koo Cha-kyung and brother of the late LG Chairman Koo Bon-moo. It has been LG's tradition for the eldest son of the LG Group to take the chairman position, while the younger brothers take over a "fair share" of affiliates and leave the group in a so-called "brothers independent management" initiative.
From Hyundai BNG Steel's standpoint, the acquisition of LG's business units is expected to cut costs and increase efficiency by enabling it to provide automotive components and industrial films to Hyundai Motor and Kia, and Hyundai Engineering and Construction.
LG Hausys' automotive component and industrial film businesses recorded an aggregate 940.3 billion won in sales in 2019, but saw an operating loss of 21.8 billion won. The operating loss expanded through the third quarter of last year, recording 35.1 billion won on 610.7 billion won in sales. The businesses take up 30 percent of LG Hausys' total sales but the worsening profitability was the deciding factor in selling them off.
