[Click eStock] "LG Electronics Acquiring AtHome, Expanding Possibility of Additional M&A"

Recently, LG Electronics, which acquired the Dutch smart home platform company AtHome, is expected to pursue additional mergers and acquisitions (M&A), according to securities firms.

On the 4th, Dongwon Kim, a researcher at KB Securities, stated, "As of the first quarter of this year, LG Electronics has secured more than 8 trillion KRW in cash, which will likely expand the possibility of additional M&A in the future." He added, "Since 2018, LG Electronics has continued a growth strategy through M&A of two or more companies on an average two-year cycle, and the management mentioned the acquisition of AtHome as the first step in building an artificial intelligence (AI) platform, indicating the possibility of further M&A."

Founded in 2014, AtHome possesses an open smart home ecosystem that connects 1,000 global brands and 50,000 types of home appliances based on the Internet of Things (IoT). LG Electronics, having acquired 80% of AtHome's shares, is expected to acquire an additional 20% stake within the next three years. Researcher Kim evaluated this positively, stating that LG Electronics has created an opportunity to enhance the scalability of the home appliance ecosystem through an open ecosystem in the smart home market, which is recognized as the next-generation AI platform.

He explained, "Until now, global home appliance companies including LG Electronics have only been able to connect their own appliances through closed smart home platforms (such as LG ThinQ and Samsung SmartThings)." He added, "By securing AtHome's smart home algorithm compatibility technology, LG Electronics will integrate its own products and competitors' appliances through various connection methods such as Bluetooth, Wi-Fi, Z-Wave, Matter, and Thread, thereby significantly enhancing openness."

Meanwhile, LG Electronics is expected to report earnings surprises for two consecutive quarters. Researcher Kim said, "Operating profits of at least 1 trillion KRW are expected for the second quarter at 1.18 trillion KRW and the third quarter at 1.14 trillion KRW, respectively. These will be record-high results for each quarter." He added, "The increase in the number of heatwave days due to global warming has greatly increased demand for cooling systems related to system air conditioners and AI data center expansion, and shipments of heating, ventilation, and air conditioning (HVAC) systems are surging."