LS Withdraws Essex Solutions IPO Amid Dual Listing Controversy... Market Cheers with Record High

President Lee Highlights Dual Listing Issues
LS to Retire Additional 500,000 Treasury Shares Next Month

The initial public offering (IPO) of Essex Solutions, a subsidiary of LS that had been at the center of a dual listing controversy, has ultimately been withdrawn. Persistent concerns over the dilution of corporate value and potential harm to existing LS shareholders have surrounded the IPO since its inception. The decision to abandon the listing is seen as a response to recent criticism from President Lee Jaemyung, who reportedly addressed the issue. Following the news, the market responded enthusiastically, pushing LS's share price to a new 52-week high immediately after the market opened.

On January 26, LS announced that it would withdraw Essex Solutions' listing application, which is currently under preliminary review by the Korea Exchange. The company explained that it made this decision after listening to concerns from minority shareholders, investors, and other internal and external stakeholders regarding the IPO, with the aim of enhancing shareholder protection and trust. As a result, LS will reexamine new investment strategies with financial investors (FIs) who participated in pre-IPO equity investments in Essex Solutions.

Previously, LS had been pursuing an IPO for Essex Solutions, its U.S.-based great-grandchild company that manufactures specialty windings, essential materials for electric vehicle motors and transformers. The strategy was to raise approximately 500 billion won through the IPO and use these funds for facility investments in the United States to respond to the power supercycle.

However, criticism that existing LS shareholders would suffer losses has persisted since the early stages of the Essex Solutions IPO initiative. The concern was that the spin-off of a highly profitable subsidiary would dilute the parent company's corporate value. The LS Minority Shareholders' Alliance even submitted a petition to the Korea Exchange urging the rejection of the preliminary listing review, while the shareholder activism platform 'ACT' announced its intention to take all possible actions, including legal measures, to block the Essex Solutions IPO.

This issue also reached President Lee Jaemyung. On January 22, during a luncheon with members of the Democratic Party's KOSPI 5000 Special Committee, President Lee reportedly singled out the LS Group case as an example of the dual listing problem. Previously, in his New Year's press conference, President Lee had cited dual listings as one of the causes of the Korea Discount (the undervaluation of the domestic stock market). With both shareholder criticism and political scrutiny mounting, LS is believed to have felt increasing pressure regarding the Essex Solutions IPO.

Shareholders welcomed the news of LS's withdrawal of the Essex Solutions IPO. Immediately after the market opened that day, LS shares surged by 8.11% to 246,500 won, setting a new 52-week high.

LS plans to focus on strengthening shareholder returns for the time being. Following the cancellation of 500,000 treasury shares in August last year, the company plans to retire an additional 500,000 treasury shares in February this year. Considering LS's recent share price, the total value is estimated to be around 200 billion won. In addition, through a board resolution in February, LS intends to significantly increase shareholder dividends by more than 40% year-on-year and to more than double the price-to-book ratio (PBR), which reflects the value per share, by 2030, thereby implementing substantial shareholder protection and returns.

LS also plans to announce additional mid- to long-term value-up (corporate value enhancement) policies in the future and to actively communicate with shareholders, institutions, analysts, and the media to reflect shareholder voices in corporate policy.

Meanwhile, LS Group plans to invest approximately 7 trillion won over the next five years in national power grid projects, including the government-led energy superhighway, as well as in the secondary battery materials sector, a key national strategic industry.