LG has signalled further expansion into the automotive industry with plans to acquire the cyber security firm Cybellum, which detects vulnerabilities in hardware and software developed for vehicles.
The South Korean electronics firm will assume an approximate 64% stake in the Tel Aviv-based startup, worth $140 million, alongside contributing $20 million as a simple agreement for future equity (SAFE) note.
The remaining shares will be acquired in the “near future” and will be valued at that stage, with the full price estimated to be roughly $240 million based on the current valuation.
The move is part of a wider shift away from LG’s more traditional lines of business, such as the smartphone business it wound down in April, and towards emerging markets like the automotive industry.
“It’s no secret the critical role software plays in the automotive industry and with it comes the need for effective cyber security solutions,” said president of the LG Electronics Vehicle component Solutions Company, Dr Kim Jin-yong.
“This latest deal will further strengthen LG’s solid foundation in cybersecurity, enabling us to be even more prepared for the era of connected cars.”
Founded in 2016, Cybellum distributes a number of vehicular security and threat detection services to clients around the world, with operations in the US, Japan, and Germany.
Its most advanced product is a digital twins platform. This creates a detailed representation of a vehicle’s software components without accessing the source code and exposes any risks that can potentially be exploited.
This platform relies on a real-time threat intelligence feed to check for flaws and delivers a full assessment of all detected vulnerabilities alongside recommended actions.
With Cybellum, the South Korean electronics firm has added to its growing portfolio of investments and acquisitions in the automotive space, as it aims to strategically expand its business operations.
LG previously acquired ZKW Group, an automotive lighting firm, in August 2018. The vehicular software firm Sonatus raised $35 million in July this year, too, with LG one of the main investors.
Also in July, LG launched a joint venture with the world’s third-largest automotive supplier Magna International to create the LG Magna e-Powertrain. This is a new company, headquartered in South Korea, that will hire 1,000 employees to manufacture eclectic motors, inverters, onboard charges, and other “e-drive” hardware.
Integrating Cybellum into LG’s existing operations will allow it to pre-emptively handle cyber security issues as they arise in production, and strengthen the resilience of hardware and software it designs and develops.
