The boards of two units of South Korea's LG Group have approved plans to merge to create an electronics and communications powerhouse.
LG Electronics and LG Information and Communications (LGIC) will merge on September 1 this year, according to the terms of an agreement signed in Seoul late last week, to create a single company which is projected to have sales of 16 trillion won ($US14.4 billion).
A major reason for the merger is the changing environment both companies find themselves in as the electronics sector and information and communications sector grow ever closer together, the companies said in a joint statement.
As such, a prime focus of the new company will be the home network business, led by digital television, and the mobile network business, led by mobile terminals and next-generation cellular services. LG Electronics already possesses much of the technology needed for digital television and has developed its own flat-panel PDP (plasma display panel) technology while LGIC is a major cellular terminal manufacturer.
Based on the synergy the merger is expected to bring, the two companies predicted sales will almost double to 30 trillion won by 2003.
Before the merger can be realised the deal must be approved at a general shareholders' meeting scheduled for July 21. Assuming approval, the merger will take place on September 1 and a merger registration will be filed on September 4.