'Future Food M&A' Accelerated by Koo Kwang-mo... LG Electronics Acquires US Startup Alphonso

Announcement of Electric Vehicle Parts Joint Venture 2 Weeks Ago
870 Billion KRW Investment with Over 50% Equity Stake
Advancing TV Business Portfolio
Securing Service and Content Competitiveness

[Asia Economy reporters Changhwan Lee and Gimin Lee] LG Electronics is acquiring the Silicon Valley-based data analytics startup Alphonso through a merger and acquisition (M&A). This new M&A announcement comes just two weeks after announcing a joint venture (JV) for electric vehicle parts with Magna, the world's third-largest automotive parts supplier. It is evaluated that LG Group Chairman Koo Kwang-mo's strong determination to secure future growth engines for the group is significantly reflected in this M&A as well.

Two M&As in Two Weeks... Chairman Koo Kwang-mo's Bold Moves

On the 7th, LG Electronics announced that it has invested approximately $80 million (about 87 billion KRW) to acquire more than 50% stake in Alphonso Inc., a TV advertising and content data analytics startup headquartered in Silicon Valley, USA.

Founded in 2012, Alphonso has secured TV viewing data from 15 million households in North America through its proprietary artificial intelligence (AI) video analysis solution. Based on this, Alphonso collaborates with global TV manufacturers and solution technology companies such as LG Electronics, Sharp, Toshiba, Hisense, and Skyworth.

With this acquisition, LG Electronics plans to enhance its TV business portfolio, which was previously hardware-centric, while securing additional growth momentum in the fiercely competitive TV market by differentiating its service and content competitiveness. The company aims to expand its TV business into service, content, and software sectors by integrating digital transformation into its core business.

Industry insiders view that Chairman Koo's strong will is reflected in this M&A following the Magna deal. Two weeks ago, on the 23rd of last month, LG Electronics announced the establishment of a JV with Magna, the world's third-largest automotive parts supplier, in the electric vehicle powertrain sector. At that time, it was evaluated that Chairman Koo made a strategic move to grow the automotive electronics business as a future growth engine for the group. The interpretation is that LG Electronics aims to expand its automotive electronics business through collaboration with a global automotive parts company and establish it as a new growth engine for the group following secondary batteries. It is also known that Chairman Koo personally led the Alphonso acquisition. He has repeatedly urged affiliates to accelerate digital transformation and strengthen software competitiveness, including data acquisition. In this year's New Year's address, he presented a business direction emphasizing that "we must perfectly satisfy customers by utilizing AI and big data."

Strengthening Software Competitiveness Following Hardware

LG Electronics is expected to actively prepare future growth engines by strengthening hardware competitiveness through the JV with Magna for electric vehicle parts, while also enhancing software competitiveness through the Alphonso acquisition.

LG Electronics shipped 30 million TVs last year and is increasing its market share in the global premium TV market, led by LG OLED TVs. The proportion of TVs connected to the internet to enjoy various content simultaneously is also steadily increasing. As of last year, smart TVs accounted for more than 83% of TVs shipped worldwide, and among LG TVs, the proportion of smart TVs exceeds 90%.

In this business environment, by utilizing Alphonso's advertising and content analytics capabilities, LG Electronics can provide various customized services and content to customers who purchase and watch LG TVs through free broadcasting services such as LG Channels. Especially, providing customer-tailored services can ultimately lead to leading customer trends, so LG Electronics expects to generate synergy not only in simple content revenue but also across all business areas beyond TVs.

Alphonso can also significantly expand its business area, which was mainly focused on North America, by leveraging LG Electronics' global network. LG Electronics plans to maintain Alphonso's startup culture-driven growth momentum by keeping the current management and employees as they are.

Park Hyung-se, head of LG Electronics' HE Business Division, said, "We will continuously enhance our business structure based on digital transformation while steadily expanding service areas based on customer value."

This content was produced with the assistance of AI translation services.