LG Acquires Global Automotive Lighting Company ZKW Group
【Summary】The Board of Directors of LG Electronics (LG) approved the acquisition of leading automotive lighting and headlight systems provider ZKW Group, in a deal worth more than $1.3 billion, LG's largest acquisition to date.
SEOUL, South Korea -- the Board of Directors of LG Electronics (LG) approved the acquisition of leading automotive lighting and headlight systems provider ZKW Group, in a deal worth more than $1.3 billion, LG's largest acquisition to date.
Under the terms of the transaction, LG Electronics will acquire a 70 percent stake in ZKW Group with parent company LG Corp. purchasing the remaining 30 percent.
The merger is expected to result in synergies that allow the combined companies to lead the global lighting sector in autonomous vehicle components.
ZKW Group is a high-tech leader in automotive lighting systems with a presence in markets throughout Europe in addition to China, Mexico and the United States.
With revenues of $1.5 billion in 2017 and an average annual sales growth rate of more than 20 percent over the past five years.
ZKW products are found in many major European premium automotive brands including Audi, BMW, Porsche and Daimler. ZKW's offerings will complement LG's growing Vehicle Components operations which expects the premium automotive lighting segment to expand faster than traditional auto lighting.
ZKW's lighting business, which has focused on premium vehicle components and related accessories, will have a much greater market presence through LG's extensive global sales network.
As the industry transitions from traditional halogens to LEDs and lasers, ZKW sees itself in the enviable position of being only one of the first companies worldwide that produces matrix LED headlamps and laser headlights. ZKW Group was an early investor in laser headlights.
Focus on Intelligent Automotive Lighting
LG and ZKW will focus on developing intelligent lighting solutions capable of displaying high-resolution information and warnings on roads collected from sensors, including autonomous driving cameras and automotive communications.
"Through this deal, LG is adding a new growth opportunity to its automotive components business, a future growth opportunity with tremendous potential," said Jo Seong-jin, chief executive officer of LG Electronics. "In addition to strengthening ZKW's product development capabilities, LG's global production experience and international business network will present unlimited opportunities for both companies in the auto market of tomorrow, which includes intelligent lighting solutions."
LG's Vehicle Components Company, which oversees the company's automotive components business, recorded sales growth of 26 percent to $3.15 billion in 2017. The global automotive lighting market is expected to grow from $24.5 billion last year to $29 billion by 2020, with headlights contributing 70 percent of the total.
LG Electronics Vehicle Components Company focuses on commercializing autonomous and environmentally responsible automotive components and core solutions based on LG's proprietary technologies.
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