Battery business IPO won't affect LG Chem's controlling stake, company says

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Battery business IPO won't affect LG Chem's controlling stake, company says

A public offering for LG Chem’s battery subsidiary is at least a year away and won’t affect the petrochemical company’s controlling stake, LG Chem CFO Cha Dong-seok said Thursday.
 
His comments came during a conference call with investors Thursday afternoon, after LG Chem’s board of directors approved the battery business’ spinoff. The business was to become a separate entity wholly owned by LG Chem.  
 
Batteries are the second-largest revenue source for the company after petrochemicals, but are considered to have the highest growth potential, given the ongoing push by global carmakers to increase offerings of electric vehicles.
 
After the announcement, LG Chem’s stock prices on Thursday plummeted 6 percent from the previous trading session. Investors had pulled out on worries that the company’s value would fall after the battery business is split out, leaving petrochemicals, new materials and life sciences behind. One feared scenario was the battery subsidiary going public, which could deal a blow to LG Chem’s evaluation.  
 
Cha, however, made clear that the company does not plan to sell more than 30 percent of its battery enterprise. Even if the procedures for an initial public offering (IPO) start immediately, it would take roughly a year to complete, he added.
 
Following his comments, LG Chem’s stock price on Friday rebounded 3.26 percent from the previous trading session.  
 
LG Chem has argued that the battery unit’s split from other businesses would make it possible to secure larger funds and to make faster investment decisions in the rapidly growing electric vehicle battery market.
 
“The IPO will establish grounds that would allow even bigger growth for the battery business. That performance will contribute to parent company LG Chem’s shareholder value and stock prices,” Cha said.  
 
In terms of investor interest and research and development investments, batteries took up a lot of the spotlight in the past few years, overshadowing other business segments. The battery organization’s spinoff as a standalone entity would benefit the remaining businesses to allow for a “proper evaluation and the investment” they deserve, LG said in a statement Friday.
 
“We plan to push for active mergers and partnerships in these business to enhance their value,” the company said.  
 
BY SONG KYOUNG-SON   [song.kyoungson@joongang.co.kr]

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