LG Chem begins to sell its stake in the polarizing plate business with a loss of operations. The company plans to sell the net assets of 1.6 trillion yuan (about 9.4 billion yuan), and its estimated sale price is about 1 to 2 trillion. In addition, LG Chem may consider transferring the management rights together. It can be found that the focus of this sale of LG Chem is to complete as soon as possible rather than the price.
On June 14, according to the Investment Bank (IB), LG Chem has sent IM to more than 20 potential acquisition candidates who have signed non-disclosure agreements (NDAs) and is expected to conduct preliminary tenders and select shortlists early next month. The sale of the shares will be handled by HSBC Securities.
LG Chemical plans to sell the related shares, and it may exit the polarizing plate business by selling the remaining shares in the future. It is understood that LG Chem's Chinese subsidiary responsible for polarizing plate business fell into a crisis of losses last year.
With subsidies from the Chinese government, Chinese panel makers have increased their LCD panel capacity on a large scale, resulting in oversupply. Although the new-generation display technologies such as OLED are rapidly developing, LCD still accounts for 95% of the production capacity in the global TV market, resulting in many companies still interested in polarizing plate business.
Currently, LG Chem's polarizer business has production lines in Beijing, Nanjing and Guangzhou, China. As a result, many of the same companies in China as well as forward and backward operators have been included in the IM distribution target. In addition, domestic and foreign strategic investors (SI) and financial investors (FI) are also considered.
In addition, LG Chem is currently selling not only its polarizing plate business, but also its glass substrate business.
As the display and TV markets shift rapidly from LCD to OLED, the company will reorganize the business unit. The sales of the two businesses total about 2 trillion, and the sale of equity is expected to exceed 1 trillion in funding. The proceeds from the sale will be concentrated on the investment and development of organic light emitting diode (OLED) materials.
Currently, LG Chem is negotiating with Dow DuPont, the largest chemical company in the United States, to acquire Soluble OLED material technology. The price of the technology acquisition is estimated to reach 200 billion to 300 billion won. At the same time, LG Chem is also promoting the acquisition of Solvay Polyamide (PA) Europe. According to the IB industry, LG Chem is reviewing two other companies for further business restructuring and mergers and acquisitions in order to restructure their businesses.
It is understood that on March 26 this year, there was industry news that LG Chem recently considered selling LCD glass substrates and polarizing plates in the information electronics materials business unit, and has now entered the buyer's recruitment process. For glass substrates for LCDs, BDA Partners has been selected as the company in charge and is looking for buyers. As for the polarizing plate division, it is considering the sale of its Chinese division. It has selected HSBC Securities as the company in charge and issued an investment guide. Chinese companies in similar industries and the Global Private Equity Fund (PEF) are considering investment.
Last year, although LG Chem's Information Electronic Materials Division and Materials Division achieved sales of 274.51 billion won (approximately 16.26 billion yuan), operating losses occurred due to the deterioration of the display panel market. The LCD industry, which is closely related to the display industry, has stagnated. The sale of the LCD-related business also echoes the strategy of the LG Group's LG Display, which has changed its business structure from LCD to OLED due to poor LCD performance.
In addition, recent media reports indicate that as the company accelerates its business restructuring, LG Chem's earnings momentum is changing. Profit growth from its battery division is expected to lead to improved earnings.
According to KTB Investment & Securities, LG Chem's battery business sales this year will reach 978 billion won (approximately RMB 57.2 billion), and operating profit will reach 253.8 billion yuan. This is an increase of 50% and 21% over the previous year, respectively. It is said that the sales of electric vehicles in Europe will increase, and the growth of the overseas energy storage device (ESS) market will drive profit growth. If the battery business accounted for 23% of last year's total sales, it is expected to exceed 30% this year.