SEOUL, Sept. 12 (Korea Bizwire) – LG Chem Ltd., South Korea’s top chemicals firm, said Monday that it has decided to merge with its biotech unit, LG Life Sciences Ltd., in a bid to diversify its business portfolio.
“The merger aims to upgrade its future-oriented business portfolio by venturing into the red biotech sector,” LG Chem, a chemical unit of South Korean conglomerate LG Group, said in a regulatory filing.
The proposed merger will be completed by the end of the year, the company added.
LG Chem said it will spend 300 billion won (US$271 million) to 500 billion won every year for research and development to foster the biotech segment. “We expect our biotech business to generate 5 trillion won by 2025,” it said.
If the merger proceeds, LG Chem will have a business portfolio ranging from electric vehicle batteries and basic chemical materials to biotech and industrial chemicals.
Earlier this year, LG Chem took over a local pesticides and fertilizer maker, Dongbu Farm Hannong, for 425 billion won (US$385 million).
The takeover push comes as LG Chem faces a growing challenge from Chinese rivals in its flagship chemicals and electric car battery businesses.
Dongbu Farm Hannong is the No. 1 crop protection firm and the top seed producer in the country, with shares of 27 percent and 19 percent, respectively.