(Nikkei BP Group)
(No.1 High-Tech News Site in Japanese)
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| Hyundai, LG Semicon Close to Agreement on Consolidation
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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.
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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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