Philips Electronics NV said Friday that it has signed a deal with Korea’s LG Electronics Co Ltd to acquire a 50% stake in the company’s flat panel active matrix liquid crystal display business. Philips is paying $1.6bn to buy into LG LCD, which claims to be the largest manufacturer of AMLCDs in the world. The market for such flat panel displays was worth $8bn in 1998 and is projected to grow 20% annually. LG LCD booked revenue of roughly $500m last year and is looking at $1.8bn in sales this year.
Philips and LG say the new company will begin as a manufacturing and technology joint venture and could potentially develop into a full joint venture over time, which would incorporate all of the AMLCD operations of both companies. Each company will hold equal management rights for the venture, which currently consists of three production facilities in Kumi, Korea. The deal is expected to close at the end of July and the joint venture will officially start in August.
For LG, the move comes as part of a general restructuring effort to build up its financial position and focus on core businesses. The company has been either selling or closing a number of existing businesses, while forming strategic partnerships in other areas. Thus far, the activities have brought in roughly $4bn since last year from various global companies.
