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LG Group has joined hands with Morgan Stanley again to acquire Iljin Materials. Morgan Stanley is drawing attention as it has been almost monopolizing financial and business-related consulting orders from LG Group, which has no financial affiliates.
LG Chem appointed Morgan Stanley as a financial advisor for the acquisition of Iljin Materials. Officials from both companies are discussing preparations for the preliminary tender scheduled for July 1.
LG Chem is seeking to take over Iljin Materials to secure a stable supply of copper foil, one of the four major materials for electric vehicle (EV) batteries. Among secondary battery materials, LG Chem directly produces cathode materials and cathode conductive materials but purchases copper foil from SK Nexilis, Solus Advanced Materials and Iljin Materials. Along with Samsung SDI, LG Chem is regarded as one of the companies that can acquire Iljin Materials single-handedly. The value of Iljin Materials is estimated at 3 trillion won, while LG Chem's cash equivalents amount to 9 trillion won.
Morgan Stanley cemented its relationship with LG Group by successfully serving as a lead manager for LG Energy Solution’s listing on the KOSPI stock market in January. The U.S. investment bank actively attracted foreign investors, and subscriptions to LG Energy Solution’s IPO totaled 12.75 trillion won, the largest figure in Korean IPO history.
In particular, even after LG Energy Solution’s listing, Morgan Stanley paved the way for the Korean battery maker’s early entry into the Morgan Stanley Capital International (MSCI) Index, helping it benefit from investment from index funds and exchange-traded funds (ETFs) that follow the MSCI Index.
LG Group responded by selecting Morgan Stanley at the end of May as the main lead manager of the listing of LG CNS, which is expected to cross 5 trillion won in enterprise value. Experts expect LG CNS to be listed at the end of this year or in the first half of next year.
Morgan Stanley helped LG Group respond to the Korean Fair Trade Commission’s tightening regulations on work funneling last year. Under advice from Morgan Stanley, LG Corp., the group's holding company, decided to sell 60 percent of its 100 percent stakes in S&I Expert, a property management company that manages LG Group buildings, and S&I Construction, a company that builds group affiliates’ factories, to Macquarie Asset Management and GS Engineering and Construction, respectively.
Meanwhile, Lee Choong-seop, head of LG Electronics’ M&A business since last year, previsouly worked at Morgan Stanley Korea.