Shanshan shares plans to raise 3.1 billion yuan to acquire LG Chem's LCD polarizer business

by:Kimeery     2021-05-27

On the evening of June 9, Shanshan (600884) announced that it plans to spend US$770 million to acquire 70% of LG Chem’s LCD polarizer business and related assets in China, Taiwan, and South Korea. LCD polarizer market dominated by a few companies.

According to reports, LG Chem will set up a holding company (hereinafter referred to as the “holding company”) with cash capital in China, and Shanshan will increase its capital to the holding company to obtain 70% of the shares. LG Chem Hold the remaining 30% equity. In the future, Shanshan shares will purchase Nanjing LG Chemical’s Nanjing LG Chemical, Guangzhou LG Chemical, Taiwan LG Chemical’s LCD polarizer business and 100% equity of Beijing LG Chemical through the holding company, and acquire the LCD polarizer assets and knowledge directly held by LG Chem Property rights (hereinafter referred to as 'underlying assets').

As of the end of the first quarter of 2020, the underlying net assets were 759.2 billion won; in 2019, the operating income was 166.1 billion won and the pre-interest and tax profit was 245.2 billion won.

The plan shows that the benchmark purchase price of the target assets to be acquired this time is US$1.1 billion, and Shanshan shares holding 70% of the equity will cost US$770 million. To this end, the company launched a new round of non-public issuance plan, intends to raise 3.1 billion yuan from the issuance of shares of Shanshan Group, Pengze Trading and Yinzhou Jielun, which will be used to increase the capital of the holding company. The reporter noted that the subscribers of this non-public offering are all related parties. Among them, Shanshan Group is the controlling shareholder of the company, and Pengze Trading and Yinzhou Jielun are wholly-owned subsidiaries of the controlling shareholders.

It is worth mentioning that the acquisition of 70% equity is just the beginning, and Shanshan shares and LG Chemical have also made relevant arrangements for the subsequent 30% equity transfer. According to the plan, in the first, second, and third years after the completion of this transaction, Shanshan will acquire 5%, 10%, and 15% of the holding company under the name of LG Chemical in batches, and finally reach the holding company. Wholly-owned holding.

LG Chem is the largest comprehensive chemical company in South Korea. Its main business involves petrochemicals, energy solutions, advanced materials, life sciences, fertilizers, and pesticides. The product categories of the advanced materials business include polarizers. , Semiconductor materials, photoresist for display, battery materials, LCD for Samsung films and OLED materials and other electronic chemical materials. At present, LG Group is the controlling shareholder of LG Chemical, with a shareholding ratio of 33.3%.

LG Chem established the LCD polarizer business in 1997, mainly engaged in the Ru0026D, production and sales of LCD polarizers. Its downstream customers are mainly LCD manufacturers such as LG Display, BOE, and Sharp, among which LG Display and the company The cooperation time is as long as 20 years, and BOE and Sharp also have more than ten years of cooperation experience with the company.

Currently, the mainstream polarizer manufacturers are still concentrated in Japan and South Korea. LG Chem, Sumitomo Chemical, and Nitto Denko are the industry giants. LG Chem has a market share of 25% in 2018; in recent years, domestic The competitiveness of manufacturers Sanlipu and Shengbo Optoelectronics has gradually increased, with a market share of 8%. With the rise of the domestic panel industry and the rapid growth of production capacity, the demand for polarizers in China continues to grow. There will be a production gap of 231 million square meters in 2020, and the local supporting rate is expected to rise.

Shanshan shares landed in the capital market in 1999. From clothing production to the cross-border new energy industry, it is mainly engaged in the research and development, production and sales of lithium battery materials. It is the three major domestic lithium batteries that span positive electrodes, negative electrodes and electrolytes. Materials manufacturers, the new energy business has now become the main profit contribution sector. In 2019, affected by factors such as rising raw material prices and the decline of subsidies in industries such as new energy vehicles and photovoltaics, the performance of Shanshan shares declined.

For another crossover, Shanshan shares said that by acquiring LG Chem’s LCD polarizer-related assets this time, LG Chem’s leading position in the LCD polarizer market will be grafted, and key solutions and technologies will be used to expand Market share, further improve the industrial layout, and enhance overall competitiveness and sustainable development capabilities.

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