LG CNS Co., the system integration unit of South Korea’s LG Group, has agreed to sell its automatic teller machine (ATM) division to Kosdaq-listed ATEC Co. and its subsidiary ATEC T& Co. for 42 billion won ($37.2 million), according to industry sources on Wednesday.
The move comes after ATMs have rapidly lost its ground to mobile and online banking systems in the country. This is also seen as part of LG Group’s efforts to boost the group companies’ competiveness through business reform.
Under the latest deal, the buyer will guarantee job security for employees of the division that generates 90 billion won in annual sales on an asset of 64 billion won. LG CNS acquired the business unit from its sister company LG N-Sys Inc. in 2013.
Earlier, LG CNS board decided to demerge its financial automation business to sell it. Following the spinoff, the company is expected to focus its resources more on new core business projects such as energy solution, healthcare and big data.
LG CNS had once controlled more than half of the domestic ATM market, but its market influence has gradually waned in growing competition with web and mobile banking. The company’s ATM output stood at 2,993 units last year, down from 7,442 units in 2014, while its factory operated at 75 percent of full capacity at the end of June, down 80.3 percent a year ago.
The latest divestiture also represents LG Group’s long-term strategy to max out the potential of future growth engines from mergers and acquisitions, while streamlining less-performing businesses, an initiative for bold organizational transformation driven by Koo Bon-joon, vice chairman and CEO at LG Group who returned to LG Corp., LG Electronics’ holding company.
ATEC, a manufacturer of liquid crystal display (LCD) display applications, posted 3.2 billion won in operating profit in the first six months of this year on sales of 59.2 billion won. Its majority shareholders and top executives are closely linked to LG companies. Shin Seung-young, an executive who owns nearly 30 percent of ATEC, had worked for LG Electronics’ computer business. ATEC CEO Han Ga-jin and vice president Koo Ja-joon joined ATEC from LG Electronics and LG N-Sys, respectively four years ago.
By Chung Seung-hwan
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