Secured 80% Stake First... Acquisition Amount Undisclosed
"LG Generative AI Integration... Realizing 'AI Home'"
Jo Joo-wan "Transition to Platform Company, Not Product"
LG Electronics has completed a merger and acquisition (M&A) deal for the first time in two years. It is the first company-wide M&A in two years and the first acquisition of a software (SW) business company in three years. This move is explained as part of CEO Jo Joo-wan's plan announced last July through the 'Future Vision 2030' to transform the company from a hardware (home appliances)-focused business to a software platform company.
Jo Joo-wan, CEO of LG Electronics, is explaining the '2030 Future Vision' at an LG Electronics press conference held on July 12 last year at LG Science Park in Magok-dong, Gangseo-gu, Seoul. [Photo by Yonhap News]
On the 3rd, LG Electronics announced that it recently signed a contract to acquire an 80% stake in Athom, a Dutch smart home platform company. The remaining 20% stake is planned to be secured within the next three years. The acquisition amount was not disclosed. According to U.S. data firm RocketReach, Athom was founded in 2014 and is a small but strong company with sales of $5.9 million (approximately 8 billion KRW) and 54 employees. It owns the smart home hub 'Homey,' which connects home appliances and Internet of Things (IoT) devices.
LG Electronics will be able to build an 'AI Home' appliance ecosystem by linking the Homey Pro platform with its own generative artificial intelligence (AI). Homey Pro connects with over 50,000 types of home appliances and IoT devices. The Homey app store has about 1,000 applications that connect and control products from global brands such as Philips and IKEA. This means LG Electronics can secure data from not only its own devices but also third-party devices like Philips and IKEA, enabling customized services. Customers can download apps from the app store to connect and implement a smart home with LG Electronics as well as Athom-linked brand devices.
Various home appliances and Internet of Things (IoT) devices such as air conditioners, TVs, refrigerators, water purifiers, smart curtains, and smart lighting connected through LG Electronics AI Home. [Photo by LG Electronics]
LG Electronics plans to combine its unique empathetic intelligence (AI) appliances with generative AI to usher in the 'AI Home' era beyond just 'smart homes.' The strategy is to grow into an 'Intelligent Space' solution company that utilizes AI Home functions not only in home-installed appliances but also in mobility and commercial spaces.
The Intelligent Space strategy is a concept first proposed by LG Electronics, ahead of other home appliance companies such as Samsung Electronics, Whirlpool (USA), TCL, and Hisense (China). Jung Ki-hyun, Vice President of LG Electronics' Platform Business Center, said, "The acquisition of Athom is the cornerstone of the AI Home business. Based on Athom's strengths in an open ecosystem and connectivity, we will expand external linked services and provide customers with diverse and multidimensional spatial experiences through synergy with AI appliances."
Since Koo Kwang-mo, CEO of LG Corporation, took office as group chairman in June 2018, LG Electronics has focused its M&A activities on electric vehicles and automotive electronics but has not made any deals related to home appliances. From a company-wide perspective, this acquisition was made two years and one month after purchasing a 6 billion KRW stake in HiBeeCharger (formerly Apple Mango), a specialist electric vehicle charger company, in June 2022. In December of the same year, HiBeeCharger acquired Spill.
Narrowing down to software businesses, this is the first deal in three years and five months since acquiring more than 50% of the U.S. TV advertising data startup Alfonso for 87 billion KRW in January 2021. Including investment cases rather than M&A, it is just four months after investing 80 billion KRW in Bear Robotics, a U.S. AI autonomous service robot startup, in March.
The reason LG Electronics acquired a platform company after two years is that it judged it would be difficult to secure growth momentum with only low-profit home appliances. LG Electronics explained that the Athom acquisition is its first software-related deal in over three years since entering the TV platform business with its proprietary software platform 'webOS' in 2021 and acquiring Alfonso.
While the business has so far focused on smart home-related products, going forward, LG Electronics aims to become a 'smart life solution company' that connects numerous devices and provides services in the AI Home domain. According to market research firm Technavio, the global smart home market is expected to grow at a compound annual growth rate of 26.23%, from $81.28 billion (about 113 trillion KRW) last year to $260.235 billion (about 361 trillion KRW) by 2028.
CEO Jo said, "We will continue to make strategic investments to transform our business paradigm, such as entering platform-based appliance services and solutions like the webOS advertising platform and AI Home."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
