KKR backs auto parts spin-out from Korea's LS Group
KKR has agreed to back automotive parts maker LS Automotive (LSA), a spin-out from Korean conglomerate LS Group, and to acquire the copper foil and flexible copper clad laminate business of LS Group affiliate LS Mtron.
Under the agreement, a KKR-LS Group joint venture will acquire LSA, which is currently 100% owned by LS Mtron. KKR will hold a 47% stake in the JV, while LS Group holds the remainder. The entity will remain an affiliate of LS Group.
The deal values both LSA and the copper foil business at KRW1.1 trillion ($943 million), according to a statement. LS Group said the transaction would allow the company to focus on its core business areas.
LSA produces switches, interior lamps, and other electrical and electronic components for major global car makers in Korea, the US and Japan, as well as local manufacturers in China and India. The company was founded in 1973, and acquired by LS Mtron in 2008 as part of LS Group’s push to strengthen its competitiveness in automotive components.
The copper business creates copper products for large-capacity batteries primarily intended for use in electric vehicles. Its customers include LG Chemical and major Japanese and Chinese battery manufacturers.
LS Mtron is LS Group’s industrial machinery and high-tech components vertical, and operates in 16 countries including the US, China, Brazil and Vietnam in addition to Korea. It is part of LS Corp, a holding company that controls several other divisions.
A relatively small part of the overall LS Group, LS Mtron accounted for KRW1.9 trillion out of overall group assets of KRW20.6 trillion in the 2016 financial year, while its liabilities amounted to KRW1.3 trillion. The division reported KRW2.1 trillion in sales and a net loss of KRW6.8 billion for the year, compared to KRW1.9 trillion in sales and a KRW17.3 billion net loss the year before.
KKR’s investment will come from its third pan-regional fund, which closed earlier this year at $9.3 billion. LSA represents the firm’s second auto parts deal in Asia this year, following the acquisition of Japan-based Calsonic Kansei Corporation for JPY498.3 billion ($4.5 billion) in March. That deal came from KKR’s $6 billion second Asian fund.
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