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LG Chem seeks agrochemical firm purchase to push growthqrcode

Mar. 10, 2016

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Mar. 10, 2016
South Korea's LG Chem is looking at more acquisitions in agriculture-chemical firms to find new streams of growth, its chief executive said, underlining an appetite for deals in the higher-margin, higher-growth industry.

Falling crop prices have triggered a flurry of deals in the global agrochemicals industry, including a $43 billion bid by ChemChina to buy Swiss seeds and pesticides group Syngenta in February.

In January, LG Chem, South Korea's top chemicals firm, also agreed to buy seeds, pesticides and fertilizers maker Dongbu Farm Hannong for 515.2 billion won ($430.05 million).

"The crop protection and seed business is very important, with food production expected to rise 35 percent by 2030," LG Chem CEO and vice chairman Park Jin-soo said at a press conference on Friday.
"While we can develop our own technology, an M&A is one of the ways which can accelerate the business," he said at the event which was embargoed until 11 a.m. Seoul time last Sunday.

The move into agrochemicals comes as LG Chem faces a growing threat from Chinese rivals in its mainstay chemicals and battery businesses.

The Chinese government in January said it will suspend offering subsidies for electric buses if they use nickel-cobalt-manganese (NCM) batteries made by South Korean companies, sending shares of LG Chem and Samsung SDI lower.

Park said the policy would have a limited impact on its business, saying NCM batteries will remain as mainstream technology as opposed to offerings by Chinese firms.

He also expected an electric car which can go 500 kilometers (311 miles) to 600 kilometers on a single charge to be commercialized in 2020.

"The electric car market is taking off faster than expected," he said, saying tough regulations are pushing automakers to accelerate electric car sales despite low oil prices.

Regarding the chemicals business, he expected margins to remain solid in the first half.

Source: Reuters

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