LG Electronics intends to sell its smartphone business to Vietnam’s Vingroup Co.
Vingroup presented the most attractive offer among companies that covet LG Electronics’ smartphone business.
Vingroup is a large conglomerate in Vietnam with a market capitalization of US $ 16.5 billion at the end of 2020. It accounts for 14% of the total market capitalization of listed Vietnamese companies. The company operates in several business areas, including hotels and tourism, real estate, distribution, construction, automobiles and cell phones, but its presence is still small on the global stage.
Vingroup entered the smartphone business in 2018. It has been producing smartphones under an original design manufacturing (ODM) contract with LG Electronics. It is currently the third largest smartphone producer in Vietnam, after Samsung Electronics and Oppo.
If you acquire the LG Electronics smartphone business, you could make a significant leap. LG’s reputation, advanced technologies and sales networks can bring innovation to Vingroup.
Although LG Electronics is considering several options under the order of LG Group President Koo Kwang-mo, the company would have decided to sell its smartphone business piece by piece, since selling it in its entirety is practically difficult.
Vingroup is reportedly interested in taking control of LG Electronics’ smartphone business in the United States. It seeks to advance in the North American market through the acquisition. LG Electronics’ share of the North American smartphone market was 12.9% in 2020.
Meanwhile, LG Electronics President Kwon Bong-seok sent an email to employees on January 20 to reassure them about job security, but a restructuring of the workforce seems inevitable, regardless of how the Division MC Business Plan is reviewed.