Korean giants appoint merger mediator

Hyundai and LG appear to have narrowly averted stern action from the South Korean government, and have appointed a third party to oversee the proposed merger of their chip businesses.

According to US sources, the companies have appointed a US consultancy, Arthur D Little, to oversee negotiations and try to rescue the deal, which was on the brink of collapse last week.

The South Korean government, which has been frustrated by the stalemate, threatened to take measures against the conglomerates unless they appointed a third party.

Both companies have dug their heels in over issues surrounding the merger of their lucrative semiconductor businesses, including the question of which company owns the controlling share.

According to industry watchers, the appointment of the consultant does not necessarily mean that the bitter struggle will end. Negotiations will be protracted as both jockey for the controlling position.

If the merger finally comes off, it may trigger external antitrust action by the US government, concerned about the alleged anti-dumping issues.

Meanwhile, Siemens is looking at a similar deal as it plans to either sell off or merge its troubled semiconductor plant. It intends to sell off businesses worth #6 billion, that include the Siemens Nixdorf retail and banking systems operation (PC Dealer 11 November).