Philips, LG in Venture

-- Electronic News, 5/24/1999

Amsterdam--Royal Philips Electronics of the Netherlands has agreed to invest approximately $1.6 billion to acquire a 50 percent share in LG LCD, the Korean-based active-matrix liquid crystal display (AMLCD) business of LG Electronics.

LG LCD had sales of $500 million in 1998. The joint venture has the potential to incorporate all the AMLCD activities of both companies. As part of the deal, two of LG LCD's production plants in Kumi, Korea will be expanded, and manufacturing of 680 x 880mm mother glass will be established at a third facility.

LG has been making efforts to restructure its business as part of a "select and focus" strategy. By following this corporate restructuring, the company claims it has attracted some $4 billion in investments since last year.

Closing of the transaction is expected at the end of July, and the joint venture will officially start in August.

"This is an excellent transaction for both companies and their shareholders," said Cor Boonstra, president and chief executive officer of Royal Philips Electronics, in a prepared statement. "We are partnering with an already profitable operation and a strong management team..."

The AMLCD flat panel market, with revenues of approximately $8 billion last year, is expected to continue to grow annually by 20 percent. The growth is expected to be driven by a greater variety of screen sizes, as well as emerging applications such as automotive and smart handheld devices.