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Little says Hyundai should get large but LG cross

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The local South Korean press has reported that Hyundai will take a controlling 70 per cent stake in a merged chip enterprise with LG Semicon. Wall Street consultancy Arthur D Little yesterday announced that it recommended Hyundai have that stake because it would be more competitive than LG Semicon. According to English language newspaper The Korea Times, LG immediately hit out at the proposal, saying it did not agree on the criteria. But whether LG likes it or not, it is likely that the South Korean government will insist the merger goes ahead. If it rejected the proposal, it would breach promises it has already made. Both Hyundai and LG had until this weekend to sort out the merger. A government minister said that Hyundai and LG would have no choice in the matter. If they rejected Arthur D Little's proposal, creditors will pull various rugs from under the companies. The new chip company is expected to take shape by April of next year. If the deal does finally go ahead, it will create a company almost equal in size to Samsung Electronics, but it is unlikely to be welcomed by US DRAM companies such as Micron, which have made allegations that the large Korean chaebols have dumped product. We don't know whether Arthur D Little is exhausted by all of the negotiations, but we at The Register certainly are... ®

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