LG Chem (LG 화학 in Korean) will spin off its battery business unit which is a globally leading division in EV (Electric Vehicles) power market. The spinoff of its battery unit is approved in the Board of Directors Meeting on Thursday and a new subsidiary of LG Chem will be tentatively named "LG Energy Solution (엘지에너지솔루션(가칭) in Korean)".
A new entity, LG Energy Solution will be a wholly owned subsidiary of LG Chem after spinoff but this decision is subject to shareholder approval at a general meeting scheduled for October 30th.
LG Chem has been operating Petrochemicals, Batteries, Advanced Materials and Life Sciences. The new separate subsidiary will be launched on December 1st and manufacture EV batteries, small-sized batteries and energy storage systems.
The company said, "As the battery industry is growing quickly and profits from the EV battery sector are increasing, we have decided this is the right time for the spinoff."
LG Chem will be able to raise investment funds to meet growing production capacity from the spinoff. However, LG Chem shares dipped 6.11 percent from the previous day finishing at 645,000 KRW on Thursday as the investors were concerned that the spinoff could devalue LG Chem.
There will be no change in the performance numbers as a new subsidiary's figures will be reflected on LG Chem's financial statements after spinoff. The battery business has become too big so LG Chem plans to expand the new subsidiary, LG Energy Solution. LG Chem is currently a global leading company in the EV battery market, accounting for one-quarter in market share and there will be more potential upside as a growth in EV batteries and uptrend in chemicals cycle.
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