Shanshan’s US$770 million acquisition of LG Chem’s LCD polarizer business has been approved by the Korean government

On June 9 this year, Shanshan issued an announcement announcing that the company plans to invest US$770 million to subscribe for 70% of the newly established joint venture with LG Chem. The new joint venture will be the main body of the acquisition, integrating LG Chem’s LCD polarizer business and related assets in mainland China, Taiwan and South Korea, with a total valuation of US$1.1 billion. Meanwhile, the listed company will acquire the remaining 30% of LG Chem’s stake in the new joint venture within three years after the deal closes.

Since the Display panel industry belongs to South Korea’s dominant industry, TFT is currently designated as a national core technology by South Korea, and polarizer is one of the key raw materials for TFT-LCD panels. Therefore, for this acquisition, the Korean government believes that it needs to be reviewed. South Korea’s Ministry of Trade, Industry and Energy will decide whether LCD polarizer technology is associated with eighth or higher generation TFT (Thin Film Transistor) liquid crystal display manufacturing technology.

According to the latest news, LG Chem’s polarizer production technology does not involve South Korea’s national security and industrial security, and does not involve non-saleable technology, after the decision of the relevant government departments in South Korea. This means that Shanshan’s acquisition of LG Chem’s LCD polarizer business has removed the restrictions of the Korean government’s technical control.

According to previously disclosed information, the subject of this transaction is the LCD polarizer business and related assets of LG Chem in mainland China, Taiwan, and South Korea, including: (1) 100% equity of Beijing LG; (2) Nanjing Lejin Gold LCD polarizer business; (3) Guangzhou LG LCD polarizer business; (4) Taiwan LG LCD polarizer business; (5) LCD polarizer assets directly held by LG Chem; (6) LG Chem directly held intellectual property rights related to LCD polarizers.

Statistics show that in recent years, the display panel industry in mainland China has developed rapidly. Panel companies represented by BOE and Huaxing Optoelectronics have risen rapidly. The panel production capacity in mainland China has increased year by year, and the demand for raw materials such as upstream polarizers has also continued to increase. The target asset is an industry leader, and its LCD polarizer product manufacturing is mainly carried out in mainland China. In recent years, a number of front-end and back-end processing production lines have been put into operation in Nanjing, Guangzhou and other places, and LCD polarizer production capacity occupies a relatively high share in the Chinese mainland market .

Regarding this acquisition, Shanshan said that the domestic polarizer is currently in short supply and there is a large capacity gap, while the global polarizer production capacity is highly concentrated in Japanese and Korean manufacturers, of which South Korea’s LG Chem polarizer business is in a leading position in the industry. The acquisition is conducive to filling the shortcomings of domestic LCD polarizer industrialization and improving the layout of the domestic flat panel display supply chain.

At present, the core business of Shanshan Co., Ltd. is the lithium battery material business. Through this transaction, the listed company will be able to realize the business layout in the field of flat panel display, and add the LCD polarizer business with large market demand and leading position in the industry. Through the acquisition of high-quality assets, the listed company will improve its ability to continue operations and reduce the impact of market fluctuations in lithium battery materials on the company’s operating performance.

LG Chem said the company decided to sell the LCD polarizer business in order to focus on the OLED business, which will be LG’s future growth engine. In addition, the company’s sale proceeds will be used for automotive materials and electric vehicle battery business.

It should be pointed out that Shanshan’s acquisition of LG Chem’s LCD polarizer asset package also includes “the intellectual property rights related to LCD polarizers directly held by LG Chem”, which means that Shanshan will hold considerable patents. resource.


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