LG's parts units scrap merger deal on costs

SEOUL, Dec. 5 (Yonhap) -- The two electronics parts makers of South Korea's No. 2
conglomerate LG Group decided Friday to scrap a deal to merge with each other,
citing higher-than-expected costs.
In respective meetings, the boards of LG Micron Ltd. and LG Innotek Co. opted out
of the deal due to high costs of buying back shares from shareholders opposing
the merger, the companies said in separate regulatory filings.
The companies estimated the buyback cost at a combined 177 billion won (US$120
million). In late September, the two companies agreed on a merger on the
condition that the combined expense will not exceed 50 billion won.
"The decision is designed to protect the companies' shareholder value amid a
global financial crisis," they said.
LG Innotek makes mobile phone components, while LG Micron produces
display-related components. The combination of the two companies was expected to
create a comprehensive parts manufacturing giant with annual sales worth 3
trillion won.
LG Electronics Inc., South Korea's leading appliances maker and LG Group's
flagship, owns 50 percent of LG Innotek and 52 percent of LG Micron.
odissy@yna.co.kr
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