Enhanced Presence in Auto Parts Business
LG Electronics has acquired Austrian automotive lighting company ZKW for 1.44 trillion won, the largest investment ever made by the LG Group for an M&A deal.
LG Electronics announced on April 26 that the company decided in a board meeting to sign a contract to hold a 70% stake in ZKW for 770 million euros. The company also plans to acquire the remaining 30% stake in the company for 330 million euros. LG Electronics explained that the company decided to acquire ZKW as it has selected automotive lighting as a new growth engine for the auto parts business.
Founded in 1938, ZKW is a manufacturer of automotive headlamps and components for automotive electronic devices and supplies parts to BMW, Audi, Porsche and Volkswagen. Last year, ZKW's sales amounted to about 1.26 billion euros, recording an average annual growth rate of 20% over the past five years.
LG Electronics said ZKW is known for its advanced technology and holds big growth potential.
LG Electronics has been supplying rear lamps mainly but this acquisition will allow the company to expand its business into all areas of automobile parts including headlamps.
Currently, the global automotive lighting market is dominated by three companies, ZKW, SL Corporation and Ichikoh. As LG Electronics took over ZKW, the Korean electronics giant quickly became a major supplier of headlamps.