Baek Byung-yeul is a journalist at The Korea Times focused on cultural content, including films and cultural events in South Korea. You can contact him at baekby@koreatimes.co.kr to share your insights.
LG invests heavily in AI, auto parts, robots, car batteries
By Baek Byung-yeul
LG Group Chairman Koo Kwang-mo
By Baek Byung-yeul
LG Group is moving fast to restructure its business portfolio under the leadership of Chairman Koo Kwang-mo, as the country's fourth-largest conglomerate seeks to emerge as a global corporate leader in the Fourth Industrial Revolution.
LG has decided to focus on businesses such as auto parts, artificial intelligence (AI), robots and car batteries, areas that will create synergy, while disposing of water treatment, fuel cells and other unprofitable businesses.
According to investment banking sources Monday, LG Electronics has decided to sell its water treatment affiliates ― HiEntech and LG-Hitachi Water Solutions.
But the electronics affiliate of LG Group denied the speculation claiming it has not reviewed anything. “We have not considered selling HiEntech or LG Hitachi,” an LG spokesman said. LG Electronics owns HiEntech and has a 51 percent stake in LG-Hitachi.
However, given the group has been selling other non-core businesses, the speculation seem to be gaining more momentum.
Prior to the rumors of selling its water treatment business unit, LG said it decided to close down LG Fuel Cell Systems, a research and development unit for fuel cells located in Ohio.
LG previously paid $45 million in 2012 to acquire a 51 percent stake in Rolls-Royce Fuel Cell Systems but decided to cease operation to focus its resources more on core business areas.
To reduce intra-group business transactions, LG also sold a 60.1 percent stake and management rights in Serveone to Hong Kong-based private equity fund Affinity Equity Partners, Feb. 26. Serveone was the maintenance, repair and operations business of LG Group's affiliate.
Since Koo ascended to power in 2018, LG Group has been on a buying spree, being actively engaged in merger and acquisitions (M&A) to expand its capabilities in businesses that can soar in the Fourth Industrial Revolution.
In April 2018, LG Electronics acquired Austrian-based automotive ZKW after paying 1.1 billion euros ($1.25 billion). In September 2018, LG Chem acquired Uniseal, a U.S.-based automotive adhesive and sealant products maker to tap deeper into the auto industry.
For robotics, LG Electronics made equity investments in firms such as wearable exoskeleton startup 5G Robotics and industrial robot maker Robostar.
To lead the group's M&A activities, LG appointed specialist Hong Bum-shik as the holding firm's management strategy team president during a group personnel reshuffle in November 2018.
LG said Hong, the former head of the Korea branch of U.S. consulting firm Bain & Company, is expected to control the group's business portfolio and M&A projects.
LG's M&A actions will become bolder as Jo Seong-jin, vice chairman and CEO of LG Electronics, recently said the firm has drawn up a list of about 50 companies from at home and abroad in AI, robotics and self-driving technologies.