BATTERY MANUFACTURING LG Chem Splits Battery Business
LG Chem will split its global battery business. Regarding this, the company announced on that it held a board meeting and resolved a corporate spin-off plan to raise corporate value and stockholder value by concentrating on the business area of expertise.
LG Chem plans to receive approval from the extraordinary meeting of stockholders on October 30, 2020 and officially launch ‘LG Energy Solution (tentative)’ as a new corporation exclusively in charge of the battery business from December 1, 2020. This will be a physical division in which LG Chem will possess all of the stocks issued by the new battery corporation and LG Chem will possess 100 % of the non-listed shares of the new corporation.
Regarding this corporate spin-off, LG Chem said, “We came to the judgment that this is the right time for the corporate spin-off as the battery industry is growing rapidly and structural profits in the EV battery sector are being made in earnest, and added, “The corporate spin-off will make it possible to focus on the specialized business areas and enhance management efficiency, thereby upgrading corporate value and stockholder value.”
Regarding the physical division method that will be used, it was stated, “Improved corporate value through the growth of the new corporation will also have a positive impact on the mother company, and we also considered the advantages from the synergy effects of the two companies such as R&D cooperation as well as association of battery materials businesses such as anode materials.” LG Chem plans to foster the new corporation to achieve sales of over 30 trillion KRW in 2024. The expected revenue of the new corporation is around 13 trillion KRW this year.
Regarding the IPO (initial public offering) of the new corporation, it stated that “Nothing is confirmed as of now and we plan to continuously review it in the future.” It added, “Cash generated from business activities will be used as the facility investment funds according to the increase of EV demands and since LG Chem possesses 100 % of the shares, it will be possible to procure the funds using various methods.”