LG Energy to Purchase GM's Entire Stake in Michigan Battery Facility for $2.04 Billion

Synopsis

LG Energy Solution Ltd is set to purchase General Motors' full stake in their Michigan battery plant for approximately $2.04 billion. The acquisition aims to streamline operations and reduce investment burdens. The JV plant is expected to commence operations within the year, while GM adjusts its EV strategy amidst declining sales.

Key Takeaways

LG Energy Solution Ltd to acquire GM's stake for $2.04 billion.
Acquisition aims to enhance operational efficiency.
Ultium Cells JV plant in Michigan expected to start this year.
LGES plans significant cut in facility investments.
GM adjusting EV strategy due to declining sales.

Seoul, April 1 (NationPress) LG Energy Solution Ltd (LGES), the premier battery manufacturer in South Korea, announced on Tuesday its intention to acquire General Motors' complete stake in their joint venture (JV) battery manufacturing facility in Michigan, USA, for 3 trillion won (approximately $2.04 billion).

This acquisition of the Ultium Cells JV 3 plant located in Lansing, Michigan, is designed to alleviate the burden of additional investments in infrastructure and to ensure the effective operation of its U.S. facilities, as stated in a text message reported by Yonhap news agency.

The two firms have been collaborating to construct the 50:50 JV plant in Michigan, with plans to commence operations within this year. The company clarified that it does not require new funds for the acquisition, as the financial outlay was already included in the annual capital expenditure strategy unveiled earlier this year.

Earlier in the year, LGES indicated a reduction of 20 to 30 percent in its facility investments compared to the 13 trillion won planned for 2023.

In December, GM revealed its decision to divest its stake in the Lansing facility as it reassesses its electric vehicle (EV) strategies amid a downturn in EV sales.

The Ultium Cells LLC JV between LGES and GM currently operates its first plant in Ohio and a second facility in Tennessee.

In a related development, LG Chem Ltd., the leading chemical entity in South Korea, reported a shift to a net loss in the fourth quarter compared to the previous year due to decreased demand for petrochemical and battery materials. The company posted a net loss of 899.2 billion won (approximately $613.3 million) for the three months ending in December, contrasting with a net profit of 128.5 billion won from the prior year.

LG Chem holds an 81.84 percent stake in LG Energy Solution Ltd., making it the leading battery producer in the nation. The company also reported an operating loss of 252 billion won for the December quarter, compared to an operating profit of 247.4 billion won a year earlier.