“New LG”
LG Group has accumulated about 10 trillion won in cash over the past four years, analysts say. They say that with the separation of LG Group advisor Koo Bon-joon with some affiliates from LG Group, the cash will be used in merger and acquisition (M&A) for LG Group chairman Koo Kwang-mo's "New LG."
An analysis of cashable assets of all 13 listed LG Group affiliates found out a sharp increase of 9.5 trillion won over the past four years from the end of 2016 to the third quarter of 2020, said financial information company FnGuide on Dec. 6.
Cash assets of these affiliates increased from 8.978.5 billion won in 2016 to 18,550 billion won in the third quarter of 2020. If this trend continues, they are expected to surpass 19 trillion won at the end of 2020. Excluding LG Hello Vision (formerly known as CJ Hello Vision) acquired by LG Group in 2019, the amount of an increase in cash during the same period stood at about 9.5 trillion won.
A total of five LG Group companies secured more than one trillion won in cash assets. Of the total, LG Electronics, the flagship company of LG Group held 6.575 trillion won in cash assets. LG Electronics' cash reserves which stood at just over three trillion won in 2016 surged 118 percent in the four years. LG Chem (3,539 billion won) and LG Display (3,289.1 trillion won) each had more than 3 trillion won in cash assets.
Unlike Samsung and SK both of which have developed new markets through bold M&A deals, LG laid the groundwork for growth through its own R&D activities rather than M&A deals until the end of the late former chairman Koo Bon-moo’s management era. However, changes have also been shown at LG since Koo Kwang-mo took office as new chairman.
For recent several years, LG did not made any big M&A deal worth more than one trillion won. But LG acquired Hello Vision for 800 billion won in 2018, the year when Koo Kwang-mo took office, and also absorbed ZKW, an Austrian high-tech car lighting company, for 1,444 billion won in the same year.
Unlike his predecessor Koo Bon-moo, the new chairman is known to have recently ordered CEOs of major affiliates to actively seek M&A deals and revamp their companies. LG is reportedly planning to invest its accumulated seed money to revamp itself in earnest beginning in 2021 when the separation of affiliates begins.