Two Korean battery makers make last-ditch settlement
LG Energy Solution and SK Innovation managed to avoid the worst-case scenario as two South Korean battery makers managed to reach an agreement on April 11, just ahead of the deadline.
The two companies announced that they signed the agreement under which SK will pay up to $1.8 billion to LG to settle two-year-old legal disputes.
SK will pay $900 million in cash and $900 million in royalties. In return, the two companies will drop all the lawsuits pending in the United States and Korea.
“We are dedicated to working together to support the Biden Administration’s climate agenda and to develop a robust U.S. supply chain,” LG CEO Kim Jong-hyun and SK chief Kim Jun said in a joint statement.
“We are grateful to the Korean and U.S. governments and stakeholders involved for their efforts in making this settlement possible.”
In 2019, LG filed a complaint with the International Trade Commission (ITC), accusing SK of having stolen its trade secrets related to electric vehicle battery technologies.
The U.S. trade panel ruled in favor of LG this February, banning SK from producing lithium-ion batteries in the U.S. for 10 years. It was very bad news for SK, which is building $2.6 billion battery facilities in Georgia.
SK hoped for the intervention of the White House, which has the right to veto the ITC verdict. And just before the deadline, SK and LG reached the settlement.
Observers welcome the deal
“The obstacles, which weighed on the country’s battery industry, have gone,” Eugene Investment & Securities analyst Han Byung-hwa said.
“It is a win-win solution. LG can make additional investments in its facilities with the compensation, while SK will be able to continue its business in the U.S.”
Daishin Securities researcher Han Sang-won agreed.
“It is good news for both companies. In particular, SK Innovation is expected to gain momentum in the stock market,” he said.
Indeed, SK Innovation saw its share price jump 11.97 percent on April 12 compared to last week, while the share price of LG Chem, the parent company of LG Energy Solution, inched up 0.62 percent.