Selling Unprofitable Business
According to investment banking industry sources, LG CNS signed an agreement with ATEC to sell its automated teller machine (ATM) business unit on September 6. Considering the fact that the division has assets of 64 billion won (US$56.48 million) and annual sales of 90 billion won (US$79.42 million), the price of the sale is far lower than expected. This is because LG CNS and ATEC agreed to guarantee the employment and working conditions of employees.
The sale price included ATEC’s acquirement of existing ATM unit’s employees, domestic banking ATM licenses including that for supply and maintenance, land and buildings of the Pyeongtaek plant, inventory and intellectual property rights like patents. LG CNS is expected to hold a general stockholders’ meeting at the end of October to get approval for its spin-off plan and complete the sale procedure early December.
LG CNS has posted losses in the ATM business until now. The company showed an operating loss of 15.2 billion won (US$13.41 million) in 2015 as its sales decreased 40 percent, or 60 billion won (US$52.95 million). The company saw its sales slightly increase to 89.2 billion won (US$78.72 million) last year but its operating loss stood at 12.1 billion won (US$10.68 million). It also posted 1.1 billion won (US$970,874) in loss as of May this year and is expected to keep posing a loss by the end of the year.
ATEC is planning to grow the business, which has shown a loss for three years, through the smart financial trend, including internet bank, and product exports. The company said the purpose of the acquisition is to secure a growth engine by launching the new business. The company is scheduled to complete the acquisition on December 6, 2020.
Meanwhile, LG CNS’ labor union, which has opposed the sale of ATM business unit, has taken full-scale confrontation action from July. The union believes that the sale is part of the company’s plan to have a clear-out and carry out restructuring so it said it would have a full-fledged fight against the sale, including strike.