BlackRock acquires 5 percent stake in LG Electronics

LG Electronics CEO Jo Seong-jin

By Baek Byung-yeul

BlackRock, the world's largest asset management firm, has acquired a significant stake in LG Electronics, becoming the third-largest shareholder of the Korean tech giant.

The U.S. asset manager and its 13 affiliates had owned 4.97 percent of 8.14 million shares in LG Electronics and it acquired an additional 0.07 percent or 102,838 shares on May 7.

This came to attention, as a stake purchase of more than 5 percent in a listed firm requires filing a report with the Financial Supervisory Service and the Korea Exchange within five days.

With the acquisition, BlackRock is the third-largest shareholder of LG Electronics, following LG Corp and the National Pension Service.

BlackRock said the stake acquisition is for investment purposes only. The U.S.-based global investment manager with assets worth $6.3 trillion under its management reportedly owns about a 1.5 percent stake in Samsung Electronics as well.

Industry watchers presume the stake acquisition might be affected by LG Electronics' recent acquisition of Austrian automotive light maker ZKW. LG acquired a 70 percent stake in ZKW for 1.4 trillion won last month.

The deal was the largest merger and acquisition (M&A) deal in LG's history and LG expects the strategic move will provide synergy in its automotive components business. With the merger, LG Electronics plans for its vehicle components division to record 10 trillion won in revenue by 2020.

Established in 1938, the Austrian company is a global leader in the automotive lighting sector. The light maker recorded revenue of 1.26 billion euros last year and has kept its average annual growth rate over 20 percent for the past five years. The firm supplies parts to BMW, Mercedes-Benz and Audi, all of which are key battery customers for LG Chem, LG's chemical affiliate.

Thanks to robust sales of premium home appliances and TVs, LG Electronics recorded an operating profit of 1.1 trillion won in the first three months of this year. The company raked in 61.4 trillion won in sales last year, which was the company's all-time annual record.

BlackRock also has raised its stake in SK hynix to 5.08 percent.

BlackRock owned 4.99 percent or 36.36 million shares in SK hynix. It reported on May 9 that it acquired an additional 0.09 percent or 651,896 shares.