Gaon Cable to acquire G&P for vertical consolidation

A panoramic view of the Gaon Cable factory in Gunpo, Gyeonggi Province. [Courtesy of Gaon Cable Co.]

Gaon Cable Co., a subsidiary of South Korean cable company LS Cable & System Ltd. (LS C&S), will acquire G&P Co., also a subsidiary of LS C&S that specializes in power distribution cables and wire materials.

According to LS Cable & System on Tuesday, Gaon Cable held a board meeting on Monday and approved a third-party allocation capital increase and transfer of G&P shares from LS Cable & System.

Following the approval, Gaon Cable will acquire LS Cable & System‘s stake in G&P through a capital increase in kind, with the acquisition price set at 79.2 billion won ($59.2 million).

Gaon Cable focuses on medium- and low-voltage (MV/LV) cables, in contrast to LS Cable & System, which targets overseas markets such as North America and Europe with ultra-high-voltage cables.

The company holds a significant presence in the Korean market. It is the country’s top distributor of MV/LV cables.

Gaon Cable posted 1.5 trillion won in sales, making it the third-largest comprehensive wire company in Korea.

G&P, with sales of about 400 billion won last year, specializes in producing MV/LV distribution cables, automotive and marine cables, and compounds necessary for cable manufacturing.

The integration will allow Gaon Cable to achieve vertical integration by adding wire material production capabilities to its core business of manufacturing MV/LV cables.

The company aims to enhance production efficiency and quality competitiveness by integrating the entire production process, from raw materials to final products.

It also plans to expand its business portfolio across various industries as it will have the capability to produce automotive and marine wires, which are part of G&P’s product lineup.

“We will solidify our leading position in the domestic distribution cable market and strengthen our presence in the U.S.,” said Jung Hyun, chief executive officer at Gaon Cable.