LG Electronics to take entire stake in LG Ads by 2026 Minority shareholders in TV data company has right to sell stakes

Translated by Ryu Ho-joung 공개 2021-12-07 08:07:36

이 기사는 2021년 12월 07일 08:05 더벨 유료페이지에 표출된 기사입니다.

South Korea’s LG Electronics is expected to own a 100% stake in LG Ads, formerly known as Alphonso, in the next five years as minority shareholders in the US-based TV data company have put options enabling them to sell their stakes to LG Electronics’ US subsidiary.

In January LG Electronics acquired 56.5% of Alphonso for $80 million through one of its US subsidiaries, Zenith Electronics LLC. The deal included a put option that enables the owners of the remaining 43.5% can sell their stakes to Zenith Electronics for three years starting from 2024, LG Electronics said on Friday.

Under the shareholder agreement, the minority shareholders in Alphonso – now rebranded as LG Ads – can sell one-third of their stakes in the company to Zenith Electronics through a tender offer for 20 business days from March 31, 2024; two-thirds of their stakes for 20 business days from March 31, 2025; and their entire stakes for 20 business days from March 31, 2026.

The purchase price will be paid in cash, and will be the greater of the per share price based on the company’s value or the fair value of the stock.

LG Ads’ board of directors will decide the fair value of the company’s shares. But if agreement cannot be reached, the fair value will be estimated by two accounting firms, which are selected by directors representing the minority shareholders and Zenith Electronics. If the difference between the estimates is less than 10%, the average will be determined as the fair value. Otherwise, a third accounting firm will be hired to conduct another valuation, and the average of the two closet estimates will be used as the fair value.

Most of the minority shareholders are said to be the company’s existing management, including co-founder and chief executive officer Raghu Kodige and co-founder and executive chairman Ashishi Chordia.

It is likely that the put option agreement will motivate the management team to strive to increase the company’s value because this will lead to a higher price for shares subject to tender offers.

It is also better for LG Electronics to own a 100% stake in LG Ads as the US company’s TV data analysis capabilities have great potential to create synergies with the South Korean consumer-electronics giant’s existing businesses by better targeting North American consumers.

Meanwhile, LG Electronics is also said to be considering an option to take LG Ads public in the US. The put option agreement will expire if a listing happens. (Reporting by Choong-hee Won)
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