[Exclusive] LG Energy Solution Considers Equity Investment in CIS... Strategic Collaboration with 'CIS+TSI'?

[Asia Economy Reporter Lee Seon-ae] LG Energy Solution (formerly LG Chem’s battery division before the spin-off) is considering investing in shares of CIS, a secondary battery (battery) equipment company, to advance its solid-state battery business.

On the 15th, according to LG Energy Solution, investment banks (IB), and venture capital (VC) industry sources, it was confirmed that LG Energy Solution is reviewing a plan to invest in CIS’s shares. An internal source at LG Energy Solution hinted, "The business division is considering acquiring shares of CIS." However, it is still in the early stages, and if the deal is finalized, the deal closing is expected around next year. LG Energy Solution’s public relations office officially stated that they cannot confirm the facts regarding this matter.

LG Energy Solution is aggressively pursuing mergers and acquisitions (M&A), joint ventures (JV), and strategic investments (SI) to grow as a global battery company, planning to invest a total of 6 trillion KRW by 2025.

The industry views LG Energy Solution’s investment in CIS shares as targeting solid-state batteries. Solid-state batteries are lithium-ion batteries that have replaced liquid electrolytes with solid electrolytes. Compared to lithium-ion batteries with liquid electrolytes, they are structurally more stable, making them less prone to fire and explosion risks caused by external shocks or battery swelling. They also have shorter charging times, attracting attention as the next-generation secondary battery to succeed lithium-ion batteries. This is why LG Energy Solution needs to aggressively invest in solid-state batteries to maintain and advance its leadership in the battery market.

Last year, CIS acquired sulfide-based solid electrolyte material technology from KETI and has been aggressively driving expansion by purchasing a factory site in Daegu last month to increase solid electrolyte production capacity. The purchased factory site is approximately 27,941.80㎡ (about 8,452 pyeong), about 1.4 times larger than the entire site of Factory 12 in Daegu Seongseo Industrial Complex. In June, CIS also solidified its business cooperation by signing a convertible bond (CB) acquisition contract worth 3 billion KRW with TSI.

CIS specializes in electrode process equipment that manufactures cathodes and anodes, while TSI specializes in mixing process equipment located at the front end of the electrode process. Through cooperation with TSI, a secondary battery mixing system specialist, CIS has secured the entire supply chain in the secondary battery electrode process (mixing-coating-rolling-slitting), enabling it to manufacture and supply related products. CIS explained, "This convertible bond acquisition contract will strengthen the business cooperation between CIS and TSI, providing an opportunity to conduct turnkey sales to global secondary battery manufacturers. We plan to apply TSI’s dry mixer technology to CIS’s solid-state battery technology, which will accelerate CIS’s solid-state battery development speed."

The market expects that before LG Energy Solution’s investment in CIS shares takes place, CIS’s expansion of its stake in TSI will likely proceed first. Both CIS and TSI are currently partner companies conducting transactions with LG Energy Solution. A VC industry source said, "CIS ultimately plans to acquire half of the shares held by TSI’s largest shareholder. If the acquisition is successfully completed, CIS’s stake will exceed about 22%, making it the largest shareholder."

An IB industry source hinted, "In fact, LG Energy Solution’s investment in CIS shares is proceeding after envisioning a blueprint where CIS and TSI merge and then acquiring shares." However, CIS’s IR representative denied the plans or progress regarding the acquisition of TSI shares as untrue.