NPS will oppose spinoff plan for LG Chem battery business

Industry

Published: 27 Oct. 2020, 19:47 Updated: 27 Oct. 2020, 22:46

NPS will oppose spinoff plan for LG Chem battery business

[YONHAP]

The National Pension Service (NPS) will use its 10 percent ownership stake to oppose LG Chem’s plan to spin off the electric vehicle (EV) battery unit, it said Tuesday.

The NPS is the company's second-largest stakeholder.

“We agree with the company’s intention and the purpose of the spinoff but made a judgment that it would hurt the national pension’s stakeholder value,” the NPS said Tuesday in a statement.

Petrochemicals generate more than half of LG Chem’s revenue, but EV batteries are seen as the business with the most growth potential.

When LG Chem first announced the spinoff plan on Sept. 17, the company’s stock prices plummeted 6 percent during the trading session as investors worried that LG Chem’s value would fall after the spinning off of its business with the most potential.

The company's plans call for vertically spinning off the EV battery unit, meaning it will turn it into a separate, wholly-owned subsidiary. That's in contrast to a horizontal spinoff, which would have automatically given LG Chem’s existing stakeholders a certain portion of the new entity.

Having passed the board of directors in mid-September, the spinoff plan will be put to a final vote at a shareholders meeting on Friday. LG Chem’s largest stakeholder is LG Corporation with around 30 percent. Another 40 percent is owned by foreign investors, mostly institutions, and the remaining 20 percent is owned by institutional and individual investors in Korea.

“The agenda has received support from most proxy advisory firms in and outside the country, including the Institutional Shareholder Services (ISS),” LG Chem said in a statement. “This spinoff is aimed at developing our battery business into one of the world's top energy solutions companies. We will actively communicate with our shareholders on the matter in the upcoming meeting.”

BY SONG KYOUNG-SON [song.kyoungson@joongang.co.kr]