Subscribe
E-Paper
 |
| This file photo shows an ad for LG's Velvet smartphone model. Yonhap |
By Kim Bo-eun
A Russian sovereign fund is approaching LG Electronics with the aim of possibly acquiring its mobile business after LG earlier clarified that it was "leaving all possibilities open" for its money-losing mobile phone plants amid continued disastrous sales.
Reports said Tuesday the sovereign wealth fund officials from Russia are set to meet LG Electronics managements on the sidelines of their visit to Seoul as early as next week. The planned visit by the Russian Direct Investment Fund (RDIF) would primarily touch on the latest updates of South Korea manufacturing its somewhat controversial COVID-19 vaccine ― Sputnik V ― in Chuncheon, Gangwon Province.
LG Electronics' shares closed at 172,500 won, Tuesday, up 4.55 percent from the previous day as the reports fueled optimism that a sale would be in the offing.
Regarding the specifics of the meeting, LG has reiterated its earlier position, saying, "We do not know of the meeting. Nothing has changed since the CEO's statement." Industry sources said RDIF appears to be interested in making an investment, and raised the possibility of LG's mobile business being acquired via a third party, possibly another Korean firm.
The chances are quite low for RDIF to take over all of LG Electronics mobile phone facilities as Vietnam's Vingroup has been taking bold steps to acquire LG's plants in that country.
LG Electronics hasn't outlined any options under consideration or a detailed timeline for a decision; but analysts say it has dropped a plan to downsize the mobile business because top management has agreed to sell off the unit. However, this doesn't include a plan to sell LG's mobile patents.
"RDIF's approach to LG Electronics is good for LG in terms of helping it raise the selling price. But it appears there is still a high likelihood that Vingroup will acquire all of LG's mobile business," a senior industry official said. "LG's production base in Vietnam and Brazil will be appealing for Vingroup which is seeking to increase its market share in mid- to low-price phones."
Vingroup is Vietnam's largest listed firm focusing on real estate development and retail. It has a subsidiary in the smartphone business, VinSmart. Both VinSmart and LG have a smartphone production base in Vietnam's industrial city of Haiphong.
The firm's issuing of $300 million in bonds to drive its automotive and smartphone units ― according to the company ― has also raised speculation that this could be a step toward taking over LG's mobile business.
The industry officials said even if the meeting between RDIF and LG were to take place, this would be for the former to check on LG's intellectual property including tech- and design-oriented patents.
Facebook is cited as a possible candidate to acquire LG Electronics' mobile intellectual property. Facebook earlier joined with Taiwan's HTC to release the Facebook Phone, though the mobile device failed to impress.
An additional view is that German car manufacturer Volkswagen may be interested in LG's mobile plants as a means to strengthen its connected car business. The two formerly engaged in joint R&D in connected car service platforms.
LG's mobile business has posted 23 consecutive quarters of operating losses since the second quarter of 2015, totaling 5 trillion won as of the end of last year.
LG sold just 24.7 million smartphones globally last year, taking up 2 percent of sales as the ninth-largest player in the market, according to market tracker Counterpoint Research. LG's mobile division employs over 3,000 full-time and part-time workers.
