[Courtesy of ZKW]
SEOUL -- LG Electronics, a unit of South Korea's fourth-largest conglomerate, disclosed a deal to acquire ZKW Group, an Austrian automotive lighting system producer, revealing its strategy to tap into a vehicle component industry.
LG Electronics said it would buy a 70 percent stake in ZKW for 770 million euros while its parent holding company, LG Corp., will purchase a 30-percent stake for 330 million euros. ZKW produces premium car headlamps used for high-end European cars.
The South Korean company promised to retain ZKW's current management and guarantee the employment of Austrian workers for the next five years. The deal is worth $1.2 billion.
LG Electronics regards the auto parts industry as a new growth driver as its mobile phone division has been stagnant. Other LG group units have also shown a strong interest in auto electronics and connected cars.
"With this acquisition, we are strengthening our growth engine for the auto parts business, which is growing rapidly," LG Electronics vice president Cho Sung-jin said. "Combining our advanced IT technology with ZKW's premium headlamp technology, we will showcase innovative products that would lead the automotive lighting industry."
LG Electronics's first-quarter net profit fell 12.7 percent on-year to 729.9 billion won ($674 million). Operating profit was up 20.2 percent to 1.1 trillion won while sales rose 3.2 percent to 15.1 trillion won.
The company attributed its improved operating profit to strong demand for premium home appliances and TVs, but its mobile division posted an operating loss of 136.1 billion won. LG's smartphone business has been in the red for years.
Copyright ⓒ Aju Press All rights reserved.
