[Asia Economy Reporter Park So-yeon] LG Chem is planning a physical division of its battery business division. The company is reported to have convened an emergency board meeting on the 17th for this purpose.
According to securities firms and industry sources on the 16th, LG Chem is set to spin off its battery business division, the Battery Business Unit, and is expected to finalize this at the board meeting on the 17th.
The likely method of spin-off is a physical division where only the Battery Business Unit is separated from LG Chem and managed as a subsidiary wholly owned by LG Chem.
The main reason LG Chem wants to spin off its battery business is to secure investment funds through an IPO to support the growth of electric vehicle batteries.
LG Chem is the global number one company in electric vehicle batteries and has secured a large volume of orders from global automakers.
To handle this volume, more than 3 trillion KRW in investment is required annually for establishing and expanding local factories, making fundraising through listing essential.
By physically dividing, LG Chem can maintain control by holding all shares of the spun-off Battery Business Unit and can raise substantial funds in the future through listing or share sales.
LG Chem has been steadily pushing for the spin-off of the Battery Business Unit internally. However, due to continued losses in the electric vehicle battery sector, which is the future growth engine and core of the battery business, the spin-off decision was not made easily.
However, in the second quarter, the electric vehicle battery sector turned a profit for the first time, and with the profit trend expected to continue, it is evaluated that the conditions for listing have been sufficiently met.
LG Chem’s backlog of electric vehicle battery orders amounts to approximately 150 trillion KRW, supplying batteries to major global automakers including Tesla in the U.S., Hyundai Motor, Volkswagen, BMW, General Motors (GM), Mercedes-Benz, Porsche, and Ford.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
