By Heekyong Yang and Joyce Lee
SEOUL (Reuters) – Shares of SK Innovation Co rose as much as 18.5% while LG Chem Ltd shares rose as much as 4.1% on Monday after the South Korean battery makers agreed on a 2 trillion won ($1.8 billion) dispute settlement over electric-vehicle (EV) battery technology.
LG Energy Solution, a wholly owned subsidiary of LG Chem, and SK Innovation also agreed on Sunday to drop all litigation in the United States and South Korea and not to sue each other for 10 years, after the core dispute had threatened the EV plans of Ford Motor (NYSE:) Co and Volkswagen AG (OTC:).
Ford said in a statement on Sunday that it was pleased the battery makers had settled their differences, and that the agreement allowed Ford to focus on delivering EVs for retail and fleet customers.
“The market sees the deal in favour of SK as the settlement amount was less than expected; some had even said it could cost up to 7 trillion won. Today’s stock price seems to reflect that response,” said Cho Hyun-ryul, analyst at Samsung (KS:) Securities.
“The agreement is positive for both companies’ stock prices, by resolving the uncertainty of the lawsuit issue,” Cho added. “For SK in the past, the value of its battery business was less reflected in its stock price compared to competitors. However, this deal with LG could serve as leverage.”
Shares in SK Innovation had fallen 19.7% since February, when U.S. International Trade Commission sided with LG Chem on the trade secrets case, while LG Chem shares had fallen 15.4%.
The wider market was up 0.3%.
($1 = 1,121.4100 won)
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.