LG Electronics’ shareholders’ meeting’D-1’… Will the decision to withdraw the MC business without retirement?

As LG Electronics’ regular shareholders’ meeting is approaching a day ahead, the possibility of reviewing in the direction of withdrawing the mobile communication (MC) business rather than selling it is growing, and thus the official position of LG Electronics is drawing attention.

Internally, the focus is on continuing the employment status through the transfer of MC employees to other business units. The opinion that it is something dominates.

According to related industries on the 23rd, LG Electronics will hold a regular shareholders’ meeting in 2021 at the LG Twin Tower in Yeouido, Seoul on the morning of the 24th, the next day. At the shareholders’ meeting on this day, major issues to be pursued this year will be decided, including the plan to establish a joint venture company’LG Magna’ for the electric vehicle powertrain business with’Magna International’, the world’s third-largest electronics company.

Above all, the interest of this shareholders’ meeting is whether it will reveal more detailed guidelines than before on how to deal with the MC business, which is LG Electronics’ “sick person”. The establishment of a joint venture with Magna is already underway, and after passing the shareholders’ meeting and the board of directors, the pace of business promotion is accelerating. Therefore, shareholders’ interest must be the MC business, which is considered as the main culprit that eats LG Electronics’ performance along with the electronics business.

Since LG Electronics officially announced that it is considering various ways of dealing with the MC business, the curiosity is growing as it has not been able to come up with such additional prospects. In the conference call following LG Electronics’ 2020 4Q earnings announcement held at the end of last January, as before, only the principle stance of “opening all possibilities and reviewing, and no confirmed issues” is repeated. It is in a state that it may be decided at the time.

However, internally, as movements have been spotted around the direction of relocating the MC business personnel to other business units, etc., the observation that LG Electronics is putting emphasis on the direction of retaining employment while actually giving up the MC business is gaining strength. .

Prior to the announcement of the last results, President Kwon delivered a message to the employees of the MC division, stating, “Do not be anxious because the employment of members will be maintained regardless of the direction of the MC business.”

After that, the atmosphere is to move to a subsidiary that needs to be recruited, such as LG Magna, which will be newly established for MC employees, or LG Energy Solution, which was newly established in December last year. With the recent increase in job turnover opportunities such as large-scale career bonds in the electronics and IT industry, it is also noticeable that MC employees are paying priority to guaranteeing employment and as much as possible to reduce the number of cases where they completely leave these places.

First of all, LG Group agrees on the optimization plan of LG Electronics’ MC business and wants to complete it as soon as possible, so the industry predicts that this shareholders’ meeting will be the decisive D-day to determine the direction of the MC business. It is pointed out that there is a need to hurry because it takes time for the MC business direction to be taken before and after the board meeting following the shareholders’ meeting, and it takes time for the follow-up work to continue.

In the financial investment industry, LG made the MC business a top priority and pushed forward, but as this deal became virtually difficult, it showed the view that the situation was not easy to proceed with methods such as partial sale or transfer of some businesses, patents, and technologies. have.

First of all, it is known that internally skeptical opinions prevail over the effectiveness of the sale through negotiations with original sellers who showed interest in LG Electronics’ MC business. The industry estimates that the partial sale, which is bound to be the next best option, is difficult to carry out as it requires a more difficult and complex sale scenario.

Moreover, it is also its own judgment that LG cannot completely exclude the technology, patents, and business know-how accumulated in the MC field and continue its electronic business. This is why the weight is leaned that the most rational option would be to discard the sale card and reduce or withdraw the business entirely, but to make the most of its assets by linking them with other businesses.

If further comments on the MC business are made at LG Electronics’ shareholders’ meeting, it is highly likely that the subsequent work will take place at a rapid pace. In the end, the key is to get attention in terms of when LG will formalize this position.

On the 26th, three days after the shareholders of LG Electronics, the shareholders of LG holding companies are also scheduled. Considering this situation, the observation that a large framework for the MC project and other major projects this year will be finalized within at least this week is convincing, and expectations are growing that the LG Group will change in earnest with the separation of the LX group.