Muscat: The Board of Directors of LG Electronics has approved the acquisition of leading automotive lighting and headlight systems provider ZKW Group, capping a deal worth more than 1.1 billion euros, LG’s largest acquisition to date. LG Electronics will acquire a 70 per cent stake in ZKW Group and parent company LG Corp the remaining 30 per cent.
The merger is expected to result in synergies that allow the combined entity to lead the global automotive lighting sector. Headquartered in the Lower Austrian town of Wieselburg, ZKW Group is a high-tech leader in automotive lighting systems with a presence in markets throughout Europe, in addition to China, Mexico and the United States.
With revenues of 1.26 billion euro in 2017 and an average annual sales growth rate of more than 20 per cent over the past five years, ZKW products are found in premium European automotive brands including Audi, BMW, Porsche and Daimler. ZKW’s offerings will complement LG’s growing vehicle components operations at a time when the premium automotive lighting segment is set to expand faster than traditional auto lighting.
ZKW, which has focused on premium vehicle components and related accessories, will have a much greater market presence through LG’s extensive global sales network. As the industry transitions from traditional halogens to LEDs and lasers, ZKW is one of the first companies worldwide that produces matrix LED headlamps and laser headlights. LG and ZKW will focus on developing intelligent lighting solutions that display high-resolution information and warnings on roads collected from sensors, including autonomous driving cameras and automotive communications.
ZKW Group will continue to be managed by the current team led by CEO Oliver Schubert, who will be responsible for all operations around the world, which employs more than 9,000 people. LG is committed to maintaining ZKW’s autonomy and workplace culture. In particular, production in Austria will remain unchanged for at least five years.
“Through this deal, LG is adding a new growth opportunity to its automotive components business, a future growth opportunity with tremendous potential,” said Jo Seong-jin, chief executive officer of LG Electronics. “In addition to strengthening ZKW’s product development capabilities, LG’s global production experience and international business network will present unlimited opportunities for both companies in the auto market of tomorrow, which includes intelligent lighting solutions.”
LG’s Vehicle Components Company recorded sales growth of 26 per cent to $3.15 billion in 2017. The global automotive lighting market is expected to grow from $24.5 billion last year to $29 billion by 2020, with headlights contributing 70 per cent of the total. Through this deal, LG is reinforcing its position as a leading player in automotive components and intends to expand the range from rear lamps to related lighting products, such as headlights.