Automotive Cybersecurity Specialist
Secures 63.9% Stake... Signs New Share Investment Agreement
Plans Additional Stock Acquisition Within the Year
[Asia Economy Reporter Kim Heung-soon] LG Electronics has invested 130 billion KRW to acquire management rights of an Israeli automotive cybersecurity specialist company in preparation for the autonomous driving era. This move is a strategic step to strengthen the competitiveness of the automotive components business, which LG Group Chairman Koo Kwang-mo (pictured) has identified as a future growth engine.
On the 23rd, LG Electronics announced that it had signed a stock purchase agreement to acquire a 63.9% stake in 'Cybellum,' an Israeli automotive cybersecurity specialist company.
Cybellum's corporate value is approximately 140 million USD (about 166 billion KRW), and LG Electronics is reported to have invested 90 million USD (about 106.7 billion KRW) in acquiring the stake. Additionally, a new share investment contract (SAFE) worth 20 million USD (about 23.7 billion KRW) was signed, bringing the total investment to 110 million USD (about 130.5 billion KRW). The new share investment amount is expected to be converted into shares between the end of 2022 and the first half of 2023. Furthermore, LG Electronics plans to acquire additional shares of Cybellum by the end of this year, so the final stake and investment amount are expected to increase.
Founded in 2016, Cybellum is headquartered in Tel Aviv, Israel. The company has developed a 'multi-platform analysis tool' capable of analyzing various software programs and also possesses solutions to check vulnerabilities related to automotive cybersecurity.
The future mobility market is evolving into an era of 'connected cars' that link information and communication technology with automobiles. The ultimate goal is to realize autonomous driving by controlling vehicle infotainment systems through wireless communication and remotely operating devices.
At the same time, as information and communication technology is utilized, the risk of privacy violations such as software hacking or driver information leakage increases, leading to rapid growth in the related market. According to Boston Consulting Group, the automotive cybersecurity market size is expected to grow from 109 million USD (about 129.2 billion KRW) this year to 1.881 billion USD (about 2.23 trillion KRW) by 2025.
Since Chairman Koo's inauguration in 2018, LG Electronics has designated the automotive components sector as a future core business area and has been strengthening investments based on three pillars: vehicle lighting, electric vehicle powertrains, and infotainment.
Notably, in August 2018, LG Electronics and its holding company LG Corp invested about 1.4 trillion KRW to acquire ZKW, an Austrian automotive headlamp specialist. In December last year, they invested approximately 501.6 billion KRW to acquire a partial stake in Magna International, the world's third-largest automotive parts supplier, and in July this year, established the joint venture 'LG Magna e-Powertrain' in the electric vehicle powertrain field. This Cybellum stake acquisition is the third-largest M&A investment amount by LG Electronics.
Kim Jin-yong, Vice President of LG Electronics' Vehicle Components (VS) Business Division, emphasized, "With the acquisition of Cybellum, LG Electronics, which has been systematically preparing for the connected car era, will showcase its cybersecurity competitiveness in the global market."
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