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LG Chem to Spin Out Its World Leading Battery Business
South Korea’s LG Chem Ltd. won shareholder approval to hive off its superstar battery business, with investors betting the division has a better chance to thrive as a standalone entity. LG Chem edged ahead of competitors to become the largest supplier of lithium-ion batteries to automakers in the first eight months of 2020, lifting its market share to about 25% from around 11% a year ago, according to SNE Research Inc. The supplier’s ascent has been aided by its early move to target the auto sector, a wide network of relationships with carmakers and strong technical capability -- including in-house expertise on the production of battery cathodes, the most expensive component, according to Mark Newman, a Hong Kong-based senior analyst at Sanford C. Bernstein. “Their position is very, very strong. They have some geographical dominance in Europe and the U.S., and some strong relationships with major carmakers outside of China,” Newman said. “Compared to their Korean neighbors they were a bit earlier to move into EV batteries.” The world’s biggest maker of electric-car batteries said 82.3% of votes represented at Friday’s extraordinary general meeting in Seoul were in favor of the plan. LG Chem will own 100% of the division until they float between 20% and 30% of the unit. Shares have doubled this year but splitting out the unit that supplies batteries to Tesla Inc. and others will cement LG Chem’s status as a key challenger to China’s Contemporary Amperex Technology Co. Ltd. as global demand for electric-powered cars rises. LG Chem is also better positioned than many rivals for the industry’s growth in Europe, where sales have surged in 2020, and in the U.S., where an election victory for Democratic presidential nominee Joe Biden is seen spurring the push to electrify transport. Retail shareholders were upset that LG Chem is taking away the battery unit without offering any stock in it as compensation. Individual investors will have to subscribe to any IPO, which may take around a year to complete. LG Corp., LG Group’s holding company, owns 30% of LG Chem.
South Korea’s LG Chem Ltd. won shareholder approval to hive off its superstar battery business, with investors betting the division has a better chance to thrive as a standalone entity. LG Chem edged ahead of competitors to become the largest supplier of lithium-ion batteries to automakers in the first eight months of 2020, lifting its market share to about 25% from around 11% a year ago, according to SNE Research Inc. The supplier’s ascent has been aided by its early move to target the auto sector, a wide network of relationships with carmakers and strong technical capability -- including in-house expertise on the production of battery cathodes, the most expensive component, according to Mark Newman, a Hong Kong-based senior analyst at Sanford C. Bernstein. “Their position is very, very strong. They have some geographical dominance in Europe and the U.S., and some strong relationships with major carmakers outside of China,” Newman said. “Compared to their Korean neighbors they were a bit earlier to move into EV batteries.” The world’s biggest maker of electric-car batteries said 82.3% of votes represented at Friday’s extraordinary general meeting in Seoul were in favor of the plan. LG Chem will own 100% of the division until they float between 20% and 30% of the unit. Shares have doubled this year but splitting out the unit that supplies batteries to Tesla Inc. and others will cement LG Chem’s status as a key challenger to China’s Contemporary Amperex Technology Co. Ltd. as global demand for electric-powered cars rises. LG Chem is also better positioned than many rivals for the industry’s growth in Europe, where sales have surged in 2020, and in the U.S., where an election victory for Democratic presidential nominee Joe Biden is seen spurring the push to electrify transport. Retail shareholders were upset that LG Chem is taking away the battery unit without offering any stock in it as compensation. Individual investors will have to subscribe to any IPO, which may take around a year to complete. LG Corp., LG Group’s holding company, owns 30% of LG Chem.
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