LG Electronics (LG) is acquiring automotive lighting and headlight systems provider ZKW Group, capping a deal worth more than $1.6 billion (EUR1.1 billion), LG’s largest acquisition to date. Under the terms of the transaction, LG Electronics will acquire a 70% stake in ZKW Group with parent company LG Corp. purchasing the remaining 30%.
Headquartered in the Lower Austrian town of Wieselburg, ZKW Group has a presence in markets throughout Europe in addition to China, Mexico and the US. With revenues of $1.5 billion (EUR1.26 billion) in 2017 and an average annual sales growth rate of more than 20% over the past five years, ZKW products are found in many major European premium automotive brands including Audi, BMW, Porsche and Daimler, among others.
The strategic merger is expected to result in synergies that allow the combined companies to lead the global lighting sector in autonomous vehicle components. ZKW’s offerings will complement LG’s growing Vehicle Components operations which expects the premium automotive lighting segment to expand faster than traditional auto lighting. Meanwhile, ZKW’s lighting business, which has focused on premium vehicle components and related accessories, will have a much greater market presence through LG’s global sales network.
As the industry transitions from traditional halogens to LEDs and lasers, ZKW aims to boost production of matrix LED headlamps and laser headlights. LG and ZKW will focus on developing intelligent lighting solutions that display high-resolution information and warnings on roads collected from sensors, including autonomous driving cameras and automotive communications
ZKW Group will continue to be managed by the current team led by CEO Oliver Schubert, who will be responsible for all operations around the world which includes more than 9,000 employees. Production in Austria will remain unchanged for at least five years.
Jo Seong-jin, CEO, LG Electronics, said: “Through this deal, LG is adding a new growth opportunity to its automotive components business, a future growth opportunity with tremendous potential. In addition to strengthening ZKW’s product development capabilities, LG’s global production experience and international business network will present unlimited opportunities for both companies in the auto market of tomorrow, which includes intelligent lighting solutions.”
