Feeds

LG, Hyundai go to the wire on DRAM merger

Arbitrators called in to determine fair price for LG assets

  • alert
  • submit to reddit

Bridging the IT gap between rising business demands and ageing tools

Surprise, surprise. Hyundai and LG Electronics have failed to meet their self- imposed Feb 20 deadline for agreeing a price for LG’s DRAM business. Now a six–strong group of arbitrators will come up with a fair price for LG’s semiconductor assets. IT will report back on February 28, enabling the deal to conclude on March 7, according to an unnamed panel member, quoted in the Korean Herald. The two companies say they will abide by the panel's decision. LG Electronics wants $3.4 billion for its assets. while Hyundai does not want to pay more than $900 million. It is in the interest of respective shareholders that LG gets the best price for its assets, while Hyundai pays as little as it can get away with. But this gap is ridiculous. The Korean government should have imposed an either- or clause on the negotiations. There is little love lost between the two companies, and LG resents the forced disposal of its DRAM business, under the Korean Government-imposed "realignment" of Chaebol operations. More sense would have been got out of the two companies if they had known that the panel would plump for either LG’s price or Hyundai. A “fair price” could factor in more than LG’s net asset valuation. But it is difficult to estimate the worth of LG withdrawal from the endemic over-capacity of the DRAM industry. We suspect that Hyundai’s valuation is the more realistic of the two -- never mind the book value of LG’s DRAM assets. There is not exactly a buyers market for DRAM plants right now… witness Siemens’ failure to find a buyer for its modern plant on Tyneside. Hyundai faces a huge bill for post-merger consolidation and it will find it very difficult to retain the combined market share held with LG pre-merger. LG uses different manufacturing technology, so it will take time for Hyundai to reap economies of scale. And, given Hyundai’s union-unfriendly reputation, the company faces tough times ahead with LG-inherited staff. ®

The Power of One Brief: Top reasons to choose HP BladeSystem

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Nadella: Apps must run on ALL WINDOWS – PCs, slabs and mobes
Phone egg, meet desktop chicken - your mother
White? Male? You work in tech? Let us guess ... Twitter? We KNEW it!
Grim diversity numbers dumped alongside Facebook earnings
HP, Microsoft prove it again: Big Business doesn't create jobs
SMEs get lip service - what they need is dinner at the Club
ITC: Seagate and LSI can infringe Realtek patents because Realtek isn't in the US
Land of the (get off scot) free, when it's a foreign owner
Dude, you're getting a Dell – with BITCOIN: IT giant slurps cryptocash
1. Buy PC with Bitcoin. 2. Mine more coins. 3. Goto step 1
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
prev story

Whitepapers

Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Reducing security risks from open source software
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Consolidation: the foundation for IT and business transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.