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LG plans overseas buy-outs

16 октября 2007

LG Electronics is considering overseas acquisitions to provide new engines of growth as the South Korean company tries to become one of the world’s top three electronics makers.

LG plans overseas buy-outs Although still at an early stage, LG’s nascent acquisition plans underline an emerging trend among South Korean companies, which have long favoured greenfield development to grow their global presence, toward more aggressive expansion.

Nam Yong, chief executive of LG, told the Financial Times that he is interested in pursuing M&A opportunities if they can help create value for the company.

“I am not limiting myself to organic growth only. I am looking for inorganic growth as well,” Mr Nam said in his first interview since taking over the helm of the world’s fifth-largest mobile handset maker in January.

Mr Nam said it was too early to name possible M&A targets but reaffirmed that LG would not be interested in re-entering the computer chip business by acquiring Hynix Semiconductor.

“Currently, I am not interested in semiconductors.”
Mr Nam stressed that he is focusing more on business strategies to turn round the company’s struggling display business and boost the profitability of its mobile phone and flat-panel TV businesses.

Mr Nam said: “Air-conditioners or refrigerators or anything that might be helpful in improving the value creation in our businesses will be candidates to go forward.

After being burnt by bad overseas investments in the 1980s and 1990s – LG bought ill-fated US television maker Zenith in 1995 – Korean companies have been conservative with their expansion plans.

But with strong cash reserves and a rising global profile, they are beginning to look offshore again.

Analysts say that LG is likely to be interested in taking over small-to-mid-size consumer electronics companies abroad, especially a US air-conditioning company with strength in the commercial market.

Although LG is the world’s biggest air-conditioner maker, it is still weak on the commercial side.

“LG won’t likely be interested in big companies like the consumer electronics businesses of GE and Sanyo, which are up for sale, because it wants to build up on its own brand,” said James Kim at Lehman Brothers.

Источник: Financial Times

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