LG Philips is a 50-50 joint venture between South Korea’s LG Electronics Inc and Philips Electronics NV of the Netherlands. Officials from the company and its owners held talks with bankers at LG Philips Seoul headquarters, with presentations from ABN AMRO, JP Morgan, Lehman Brothers, Morgan Stanley, Salomon Smith Barney and UBS Warburg.
The IPO would raise funds to build capacity to satisfy demand for liquid crystal displays, which are used in products ranging from mobile phones to laptop computers. Demand for LCD screens has remained high, despite the economic and spending slowdown, and a share sale would give LG Philips the necessary funds to compete in the market.
LG Philips is under pressure to retain market share. Its bigger rival, Samsung Electronics Co, with its massive cash reserves of roughly $5.8bn, plans to invest billions of dollars on electronics plants. It is estimated that an LCD factory, using state of the art technology, costs approximately $1.2bn to build.
Additional pressure is coming from Taiwanese manufacturers, which are also investing in new plants, and therefore there is a real danger of oversupply in the LCD sector. In the end, those companies late to market run the risk of being squeezed out.
Source: Computerwire
