On the evening of August 1st, TCL Technology (000100.SZ) announced that its controlling subsidiary, TCL Huaxing, was the preferred bidder for the equity bidding of LGD Guangzhou's 8.5th generation LCD factory.
TCL Technology announced that, in order to further enrich the semiconductor display line technology, deepen international customer strategic cooperation, enhance industrial synergy, TCL Technology's controlling subsidiary, TCL Huaxing, recently participated in the bidding for 70% equity of LG Display (China) Co., Ltd. and 100% equity of LG Display (Guangzhou) Co., Ltd., and on August 1, 2024, received a letter from LG DISPLAY CO., LTD. (hereinafter referred to as the "seller" or "LGD"): TCL Huaxing was determined to be the preferred bidder for this equity bidding after the seller conducted a comparative review based on equity purchase price, operational support plan, delivery feasibility, and other important conditions according to the principle of fairness and impartiality.
Among them, LG Display (China) Co., Ltd. is an LGD 8.5th generation LCD panel factory, mainly producing large-size TV panels, with a capacity of nearly 200K. Its operating income in 2023 was 6.334.17 billion yuan, net income was 601.64 million yuan, total assets on December 31, 2023 were 13327.42 billion yuan, and net assets were 11802.18 billion yuan. LG Display (Guangzhou) Co., Ltd. is a module factory. Its operating income in 2023 was 11860.06 billion yuan, net income was 536.08 million yuan, total assets on December 31, 2023 were 21124.85 billion yuan, and net assets were 2838.64 billion yuan.
In fact, LGD's Guangzhou factory has been rumored to be for sale for a long time, but it has been undecided. The formal announcement by both parties not only means the acceleration of LGD's factory sale plan, but also promotes further evolution of the industry pattern.
As a global leading panel manufacturer, if TCL Huaxing successfully acquires LGD Guangzhou factory, it will greatly promote the integration of panel industry resources. In addition, Sharp Japan's 10th generation LCD factory is planned to be shut down at the end of August, and the concentration of leading companies in the industry will be further consolidated. Therefore, mainstream panel manufacturers undoubtedly have more confidence in implementing the business strategy of "demand-driven production" and promoting the industry towards a healthier and more sustainable development direction.
Regarding the subsequent transaction arrangements, TCL Technology stated that TCL Huaxing will enter into exclusive negotiations and agree on the transaction agreement with the seller on this transaction. At the same time, it is mentioned that as of the announcement date, TCL Huaxing has not reached a binding agreement with the seller on this transaction, and there is still uncertainty as to whether TCL Huaxing can finally implement this acquisition. If the final transaction agreement is reached, TCL Huaxing is expected to use its own or self-raised funds to carry out the acquisition, and the actual implementation shall prevail.