In a move that will deepen the companies’ existing ties in the display business, South Korea’s LG Electronics Inc. and Koninklijke Philips Electronics NV, of the Netherlands, announced Monday a plan to merge their respective CRT (cathode-ray tube) businesses into a yet-to-be-named joint venture company.
Under the terms of a letter of intent signed by the two companies, upon the establishment of the 50-50 jointly held company, LG stands to receive US$1.1 billion from the new entity to make up for the difference in valuation between the two business units, LG and Philips said in a joint statement.
The transaction is scheduled to close in the first half of 2001, subject to customary regulatory approvals.
The new company is expected to become the world’s leading supplier of CRTs, the picture tubes used in conventional desktop computer monitors as well as television sets, with projected annual sales of US$6 billion and a global work force of 36,000 employees, the companies said. Philips currently is ranked as the world’s leading supplier of CRTs for television sets and fifth in the computer display tube market, while LG also is a major television tube supplier and the world’s third-largest supplier of CRTs for computer monitors, they added.
LG and Philips will share equal control of the joint venture, which will be legally established in the Netherlands, with operational headquarters in Hong Kong. Philippe Combes, the current chief executive officer of Philips’ Display Components unit, will head the new venture.
This is not the first display venture between the two companies. LG Philips LCD Co., an existing 50-50 joint venture between the two companies, however, will be unaffected by the CRT business transaction, according to the statement.
LG Philips LCD makes active-matrix LCD (liquid crystal display) flat-panel screens for use in notebook PCs and stand-alone monitors.