The second half of the competition with CATL: LG Chem gets permission to spin off battery business

 LG Chem plans to take out 20% to 30% of the shares in the new division for an IPO within a year or so.

LG Chem was approved to spin off its battery business, providing the possibility for the business to go public separately.

On November 2, according to a foreign report by The Chosunilbo, at the extraordinary general meeting of shareholders held last Friday, 82.3% of the votes were in favor of LG Chem’s spin-off plan, and the battery business will become an independent company called "LG Energy Solutions." the new company LG Chem will temporarily own 100% of the shares in the division and plans to take out 20% to 30% of the shares for an IPO within a year or so.

LG Chem said last month that it plans to spin off its battery business to establish a new company on December 1 this year. This company will focus on the battery business to improve the company's professional technology and consolidate its market leadership.

According to Yonhap News Agency, LG Chem believes that the current electric vehicle battery business is developing rapidly, and the company needs to increase its investment by more than 3 trillion won each year. After the spin-off plan is implemented, the battery business will be able to obtain sufficient financial support, while also reducing the financial burden of LG Chemical's petrochemical departments.

In fact, the direct reason for the divestiture of the new energy battery business is to reduce the company's financial burden. In recent years, LG Chem has been heavily in debt, and the R&D and production of new energy batteries has continuously increased its burden.

However, in this split plan, LG Chemical’s second largest shareholder, the National Pension Service (National Pension Service), had opposed the split plan, which it believed would reduce the company’s value. However, most foreign investors and institutional investors supported the split, and the Korean National Pension Fund held 10.3% of LG Chem's shares, which ultimately failed to change the result.


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