LG Chem, LG Petchem to merge

05 July 2007 07:30  [Source: ICIS news]

SINGAPORE (ICIS news)--LG Chem, South Korea’s largest chemical producer, said on Thursday it is to merge with affiliate LG Petrochemical to reform its financial structure and achieve operational efficiencies.

“It is our intention to not only be a leader in the market and to increase company value by strengthening business competitiveness, but also to reform our financial structure and in return expect increased efficiency in the running of our businesses,” the company said in a statement.

The merger was not unexpected, considering LG Chem had already been overseeing most of LG Petrochemical’s operations, said a Singapore-based analyst with an international brokerage who declined to be named.

“I don’t see [added] synergies from the merger,” he said, noting that LG Petrochemical was already providing feedstock to LG Chem and this would not change after the two merge.

“It will be more about freeing up cash flow from LG Petrochemical to LG Chem’s electronics division, which has been underperforming since they started the business,” he said.

LG Chem’s stock fell 2.2% to won (W) 85,800 ($93.22) at 08:00 GMT after hitting a high of W90,300 earlier on Thursday while LG Petrochemical’s stock dropped 1.3% to W40,750.

($1 = W920.40)

Gina Myung contributed to this story.

By: Jeanne Lim
+65 6780 4359

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