LG has made its biggest acquisition ever today in its deal of over EUR 1.1 billion. It includes LG Electronics acquiring a 70% stake in ZKW Group and LG Corp as the parent company purchasing the remaining 30%.
ZKW Group is a leading automotive lighting and headlight systems provider operating globally. The ‘strategic merger’ that may transit into a synergy, eyes at being the leaders in the global light sector for autonomous vehicle components.
Having its headquarters in Wieselburg of, Austria, ZKW, in the high-tech automotive lighting systems industry, has its presence in markets across Europe, including China, Mexico, and the U.S.
The company chalked up revenues of EUR 1.26 billion in 2017. It also hit over 20% in average annual sales growth rate compared to the same in the last 5 years. Its products are found in the European leading automotive brands like BMW, Audi, Porsche, Daimler, and more.
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LG’s growing vehicle components operations will benefit from ZKW’s offerings. The former wants to fuel the expansion of the premium automotive lighting segment beyond traditional auto lighting. Both companies will work together on developing intelligent lighting solutions. The idea is to display high-resolution information and road warnings via sensors that include autonomous driving cameras and related communications.
As LG acquires ZKW Group, the acquisition deal entails LG is committed to maintaining the work culture and autonomy of ZKW, whose CEO Oliver Schubert will keep on leading more than 9,000 employees and all global operations of the company. This as well means that the production in Austria will remain the same for the next 5 years.
The Vehicle Components Company of LG has recorded a sales growth of 26% in the US $3.15 billion in the last year. On the other hand, it is estimated that the global automotive lighting market will grow from $24.5 billion in 2017 to $29 billion by 2020. Headlights are expected to contribute 70% of the entire estimation.
In conclusion, it is LG’s biggest deal, and it ideally boosts LG to be a leading player in automotive components. It looks to expand its automotive lighting business with headlights and other lighting products.