Will LG Invest Trillions of Won to Acquire ZKW?

According to business industry sources and local media reports, including APA, on October 9, LG Electronics and its holding company LG are said to invest US$1.2 billion to US$1.5 billion (1.4 trillion won to 1.7 trillion won) to acquire Austrian automotive lighting system firm ZKW Group. LG Electronics and ZKW said nothing is confirmed yet but the big deal can be made quickly depending on what decisions owners of the two companies make.
 
An official who is well acquainted with LG Group said, “Since the rumors about the acquisition have already spread at home and abroad, the group must have pressure to accomplish the deal without fail. ZKW is also a company run by founder’s family members so the M&A deal can be completed faster than expected when the two companies reach an agreement.”

LG has been known as a group which is passive about M&A deals. The largest M&A deals the group made were The Face Shop acquired by LG Household & Health Care at 466.6 billion won (UUS$408.98 million) in 2010 and Farm Hannong acquired by LG Chem at 424.5 billion won (US$372.37 million) last year.

However, things are changing after LG Vice Chairman Koo Bon-joon has been in charge of whole management from this year, according to business industry sources. Koo had led new businesses, including automotive electronic device, as the head of the group’s new growth engines until last year and created LG Electronics’ VC business division in 2013.

In addition, some say that the strong business networks owned by ZKW can be the base to strengthen LG’s automotive electronics business. ZKW, which has 7,452 employees as of last year, supplies automotive lighting systems to more than 21 automakers, such as BMW, Audi, Volkswagen, Volvo, Porsche, Mercedes-Benz, Ford, Infiniti and Rolls-Royce Motor. The Australian company posted 970 million euro (US$1.14 billion or 1.3 trillion won) in sales last year.