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(Nikkei BP Group)

(No.1 High-Tech News Site in Japanese)

  • Hyundai, LG Semicon Close to Agreement on Consolidation
  • January 7, 1999 (TOKYO) — “Hyundai Electronics Industries Co., Ltd. and LG Semicon Co., Ltd., two leading Korean DRAM producers, will soon reach an agreement to merge their DRAM operations,” Chong Hwa-Jon, a senior analyst at KEB Salomon Barney Securities of Korea, told a Nikkei Electronics reporter.
    He said that two principal reasons support the basic agreement on the merger. First, the merger of Hyundai Electronics and LG Semicon was a major decision reached at a meeting attended by Korean President Kim Dae-Jung. And Korean business practices require that companies conform to government-led plans to carry out their businesses smoothly, he noted.

    Second, the infusion of new funds for LG Semicon from its creditor banks has been halted. LG Semicon will be in a difficult situation if further financial sanctions are taken, he also said.

    Although Hyundai Electronics and LG Semicon were to have reached an agreement and announced a schedule for the new consolidated company by the end of 1998, the agreement was delayed. LG Semicon refused to accept a decision by Arthur D. Little Inc. of the United States on Dec. 24, which included its selection of Hyundai Electronics to run the new entity.

    LG Semicon said Dec. 27 that it would file an action against Arthur D. Little because its decision-making process and conclusion were not fair. On Dec. 28, the Korean government informed financial institutions to freeze the extension of new funds to LG Semicon.

    In the meantime, the Federation of Korean Industries (FKI) offered to serve as an arbitrator, to help Hyundai Electronics and LG Semicon reach an equitable merger agreement. As of Jan. 4, the FKI has held arbitration meetings, officials at Hyundai Electronics said.

    Related stories:
    ¥ LG Semicon Opposes Plan for New Consolidated IC Company
    ¥ Industry Groups Agree on Merger of Hyundai, LG Microchip Units

    (Nikkei Electronics)

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