Hyundai BNG Steel in talks to acquire auto materials business from LG Hausys
According to industry sources on Monday, LG Hausys is expected to sign a memorandum of understanding (MOU) with Hyundai BNG Steel on Tuesday to name the Hyundai Motor Group company dedicated to stainless steel sheets the preferred negotiator to acquire its auto materials and industrial business. The deal is estimated at some 200 to 300 billion won ($272 million), according to sources.
Hyundai BNG Steel aims to sign a confirmative deal in March after due diligence.
LG Hausys has searched for a new owner of its auto materials and industrial film division since early this year after it picked Bank of America (BOA) as a lead manager for the sale. LG Hausys had not denied market rumors about its sales plan, saying various measures are being reviewed to enhance business value.
Hyundai BNG Steel and LG Hausys are said to have decided to sign on the MOU after agreeing on overall conditions of the sale, said a source familiar with the matter, adding full-scale negotiations will begin after due diligence.
The anticipated acquisition is expected to help Hyundai BNG Steel diversify its business portfolio. An investment banking industry official said Hyundai BNG Steel also could provide auto parts and industrial film to Hyundai Motor, Kia Motors and Hyundai Engineering & Construction, making its money-losing business profitable.
The car materials and industrial film business brought an operating loss of 21.8 billion won to LG Hausys on sales of 940.3 billion won in 2019. For the three quarters of last year, the division¡¯s operating loss widened to 35.1 billion won, weighing further on LG Hausys.
The planned divestiture also draws attention as it may coincide with LG Group¡¯s spin-off. LG Group recently announced it will separate out five subsidiaries (LG Hausys, LG MMA, Silicon Works, LG International and Pantos) in March, putting them under a new holding company to be headed by Koo Bon-joon, who stepped down from the management of LG Group in 2018 to make way for his nephew and current LG Group Chairman Koo Kwang-mo.
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