LS Group and KKR Announce Partnership Agreement
July 26 2017 - 9:03PM
Business Wire
Partnership to support growth of electrical
auto parts businesses and KKR’s investment in electric vehicle
battery copper foil business
LS Group (“LS”), one of South Korea’s largest diversified
corporations, and KKR, a leading global investment firm, today
announced the signing of a definitive agreement under which KKR
will become joint partners with LS in LS Automotive (“LSA” or the
“Company”), an electrical auto parts maker for the global
automotive industry, and will additionally acquire LS Group
affiliate LS Mtron’s (“LSM”) copper foil and flexible copper clad
laminate business (the “CF/FCCL Business”).
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Under the terms of the agreement, an affiliate of KKR and LS
will together invest to create a new joint venture holding company
(“LSA JV”) and acquire the business of LSA. LS will maintain the
control of the LSA JV owning 53% of the LSA JV’s voting shares and
the LSA JV will remain as an affiliate of LS Group. KKR will own
47% of the LSA JV’s voting shares. Concurrently, KKR will acquire
full ownership of LSM’s CF/FCCL Business segment. KKR’s investment
implies a combined enterprise value of the LSA and the CF/FCCL
Business of approximately KRW1.05 trillion (US$923.6
million).
Established in 1973, LSA is a leading auto parts company in
South Korea that has successfully established globally competitive
positions in high-growth auto component segments including
switches, interior lamps and human machine interface (“HMI”)
systems, and electrical and electronics components such as power
seat modules, electrical control units, sensors and relays. LSA is
the top Tier-1 supplier of HMI components to Hyundai Kia Motors, as
well as major global original equipment manufacturers (“OEMs”) in
the U.S. and Japan, and leading local OEMs in China and India.
The CF/FCCL Business manufactures and sells copper foils for
large capacity lithium-ion batteries for primarily electric vehicle
(“EV”) applications. The copper foil business for EV battery
applications is expected to be among the fastest-growing segments
of the auto industry due to rising demand for environmentally
friendlier transportation. LSM’s EV copper foil business supplies
global EV battery leaders including LG Chemical and major battery
manufacturers in Japan and China.
Joon-woo Lee, Senior Vice President of LS Corp, commented, “This
partnership provides a terrific opportunity for LS Group, as a
large, Korean conglomerate, to align and strengthen our focus on
our core businesses. We are very pleased to enter into a
partnership with KKR, a global investment firm with significant
industry and operational experience, and work alongside the team to
achieve growth in the future.”
Hyoung Seok Lim, Managing Director at KKR, and Chung Ho Park,
Director at KKR, said, “We are very excited to partner with LS
Group and the management teams and employees of LSA and the CF/FCCL
Business to support their innovation and growth as the automotive
industry continues to evolve rapidly and the adoption of electric
vehicles expands quickly. We look forward to supporting the
management teams by leveraging our international network and
industry expertise to enhance the business’ operations and success
beyond South Korea and China."
KKR has maintained a strong track record of investing in South
Korea from its pan-regional private equity funds since 2009 and has
since invested or committed approximately US$800 million in the
market. KKR has strengthened its commitment to South Korea in
recent years to provide strong companies with the financial and
operational resources to achieve growth and improve
productivity.
KKR will make its proposed investment from its US$9.3 billion
Asian Fund III. The transaction is subject to customary approvals.
Further details of the transaction were not disclosed.
About KKRKKR is a leading global investment firm that
manages multiple alternative asset classes, including private
equity, energy, infrastructure, real estate, credit and, through
its strategic partners, hedge funds. KKR aims to generate
attractive investment returns by following a patient and
disciplined investment approach, employing world-class people, and
driving growth and value creation with KKR portfolio companies. KKR
invests its own capital alongside its partners' capital and
provides financing solutions and investment opportunities through
its capital markets business. References to KKR’s investments may
include the activities of its sponsored funds. For additional
information about KKR & Co. L.P. (NYSE: KKR), please visit
KKR's website at www.kkr.com and on Twitter @KKR_Co.
About LS MtronLS Mtron is an industrial machinery and
high-tech components firm under the LS Group. Established in 2008,
the company’s sales and operating profits stand at 2.089 trillion
won and 103.4 billion won as of 2016, respectively. Mtron employs
approximately 1,700 staff in Korea. Key operations include
machinery such as tractor, injection molding machines, and track
shoes as well as electric and auto components such as connector,
antennae, cooper foil, brake hose, and ultra capacitor. LS Mtron
has a total of 5 business locations in Korea including facilities
in Jeonju, Jeongeup, and R&D centers in Anyang and Gunpo.
Globally, LS Mtron operates in a total of 16 countries including
the US, China, Brazil and Vietnam.
About LS AutomotiveEstablished in 1973, LS Automotive is
a vehicle components manufacturer based in Korea with a global
presence. In 2008, the company was acquired by LS Mtron as part of
LS Group’s efforts to further strengthen its competitiveness in
auto components. LS Automotive has since achieved strong growth and
market expansion including China and continues to engage in
proactive investment in R&D for the future such as autonomous
and electric vehicle components. As of 2016, LS Automotive recorded
revenue and operating profits of KRW 911 billion and KRW 62.8
billion, respectively. LS Automotive’s key customers include
Hyundai Kia Motors, GM, Ssangyong, Fiat Chrysler, Audi, Daimler,
Nissan, Mitsubishi and others. The company has approximately 1,150
employees in Korea.
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LS Mtron:LS GroupDae-sung Kim, +82 2 2189
9784dkim@lsholdings.comorKKR:KKR Asia Pacific:Anita Davis, +852
3602-7335anita.davis@kkr.comorKKR Americas:Kristi Huller / Cara
Kleiman, +1 212-750-8300Media@kkr.comorThe Signature (for KKR
Korea):Nuri Hwang, +82 2 6951 3557nuri@thesignature.co.kr
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