LG Chem plans to sell LG Energy Solution stake for shareholder returns
The logo of LG Chem is seen at its office building in Seoul, South Korea, October 16, 2020. REUTERS/Kim Hong-Ji
SEOUL :South Korea's LG Chem Ltd said on Friday it plans to lower its stake in subsidiary LG Energy Solution to about 70 per cent from around 80 per cent, in a bid to improve long-term finance and boost shareholder returns, according to a company filing.
Shares of LG Chem fell 2.9 per cent in Seoul trading, while LG Energy Solution's stock plunged 6 per cent.
LG Chem maintained its earlier target of offering a 30 per cent dividend payout to shareholders in the future when the firm achieves a return-on-equity ratio of at least 10 per cent.
President Lee Jae Myung is pushing publicly listed companies to resolve the so-called "Korea Discount", which refers to a tendency for local companies to have lower valuations than global peers due to factors such as low dividend payouts, and the dominance of opaque conglomerates known as chaebols.
In October, LG Chem also faced a push from London-based hedge fund Palliser Capital in October, which blamed a heavy discount in stock valuation and "a lack of trust" in governance and poor capital allocation.
