LS: "Re-listing Overseas Assets to Respond to the Supercycle, Not a 'Split-off Listing'"

LS rebuts suspicions over Essex Solutions' domestic listing
Concerns raised over possible "split-off listing"
LS: "Growing subsidiary value for a win-win with the parent company"
Additional value-up policies to be announced this month

On January 13, LS Group responded to the controversy regarding the planned domestic listing of its subsidiary, Essex Solutions, stating that it is not a "split-off listing" but rather a "re-listing" of overseas assets in the domestic market. The company also explained that the listing is intended to respond to the "power supercycle."

Essex Solutions logo. LS Group

On January 13, LS issued a statement regarding the Essex Solutions listing, clarifying, "This is not a 'split-off listing' (physical division) that dilutes the value of the parent company, but rather a 're-listing' or 'inbound listing' that introduces previously acquired overseas assets to the Korean capital market and allows their value to be evaluated at market price." The company added, "This also aligns with the Korea Exchange (KRX)'s policy of actively attracting listings of high-quality overseas companies to globalize the capital market."

Previously, in 2008, LS invested about 1 trillion won to acquire Superior Essex (SPSX). Through continued investment, the company grew, and in 2024, after acquiring the entire stake in Furukawa Electric from Essex Furukawa Magnet Wire, a joint venture between Superior Essex and Japan's Furukawa Electric, LS established Essex Solutions by vertically integrating winding wire subsidiaries within the group. As the company moved forward with the listing, suspicions of a "split-off listing" were raised in domestic media reports.

LS cited large-scale facility investments in the special winding wire business as the main reason for pursuing the listing, emphasizing, "This is not simply an expansion, but an investment for survival, and it is to avoid missing the golden opportunity to respond to the power supercycle." In fact, Essex Solutions has recently seen a surge in orders for special winding wires for transformers, with lead times (the time from order to delivery) now exceeding four to five years. Accordingly, LS explained that more than 500 billion won in investment is needed to expand special winding wire manufacturing facilities at this time.

The company plans to use the 500 billion won to be raised through the listing for facility investment in the United States, expecting this to more than triple the company's value by 2030. LS further explained, "One of the main reasons LS's stock price has been undervalued in the past is the excessive payment guarantees and financial support burden for subsidiaries," and stated, "This listing is a decision to break this dependence on the parent company, allowing LS to be free from additional payment guarantee burdens."

LS also stated, "This listing is not about siphoning off the parent company's wealth, but rather a 'value-enhancing' approach that increases the size of the subsidiary and simultaneously raises the value of the parent company's stake."

Meanwhile, last August, LS announced it would cancel 1 million shares of treasury stock, equivalent to 3.1% of total shares issued, and has already completed the cancellation of 500,000 shares. The remaining 500,000 shares are scheduled to be canceled in the first quarter of this year. Additionally, the company plans to hold a second corporate briefing session this month to announce further shareholder return and value-up policies.