Hyundai-LG on-off merger deal off again?
Intransigence plus threats from Europe and US could kill it
The proposed merger of the semiconductor arms of Hyundai and LG is on the point of falling apart, said Korean sources yesterday. According to the The Korea Herald, the deal is running aground on the rock of control - both sides, as was to be expected, want to run the merged company and neither will give in. Also predictable (and incidentally, predicted right here) were shrieks of outrage from the US and EU. The Korean government's plans to rationalise the chaebols by merging the groups' weaker operations into the stronger raise antitrust issues, and regulators in Europe and the US will inevitably focus on any Korean mergers that actually happen. Washington meanwhile, The Herald reports, is keeping a close eye on the Korean government, and is ready to cry foul if any of the IMF loan funds are diverted to finance mergers. Some Korean business leaders remain optimistic that the LG-Hyundai deal will go through, and the nightmare suggestion of the two groups taking turns to run the company, changing over every three to four years, has been mooted. But much of their enthusiasm for seeing the deal go through no doubt stems from their need for the government to be able to rescue something from its so far abortive strategy, while avoiding having to sacrifice any of their own units. LG Semicon has meanwhile been thrown a small lifebelt by Philips Electronics, which today gavee it a three year contract to supply $700 million worth of LCDs. The deal is for TFTs in 12.1in, 15.1in and 18.1in sizes - given these dimensions we can presume the Dutch company is up to something on the home entertainment front. Deliveries start in January. ®