LG Electronics Inc., South Korea’s leading electronics company, is doubling down on its bid to lead the burgeoning global heating, ventilation and air conditioning (HVAC) market with OSO Hotwater, one of Europe’s top providers of water heating solutions, now under its wings.
The Korean company announced on Monday that it has signed a deal to take over a 100% stake in OSO, headquartered in Hokksund, Norway. The two companies agreed not to disclose the financial terms, including the acquisition price.
OSO’s water heating solutions are expected to further strengthen the Korean electronics giant’s position in the global HVAC market and help it become a top-tier player in the industry by creating great synergies with LG’s heat pump technologies.
“It (the OSO acquisition) is a key milestone on our path to global leadership in the HVAC market,” said LG Electronics Chief Executive Cho Joo-wan.
LG rose to one of the world’s top five players in the HVAC market late last year, with its advanced heat pump technologies despite its late entry.
Founded in 1932, OSO offers electric water heaters, stainless steel thermal storage systems for heat pumps and boilers and other advanced water heating technologies.
As one of the top companies in Europe’s $15 billion heating and hot water solutions market, OSO is especially the region’s No. 1 producer of stainless steel hot water systems, which boast outstanding energy efficiency and minimal heat loss.
Considering the fast growth pace of the global HVAC market, its sales are expected to increase significantly from 942 million krone ($93.3 million) in 2024. It has manufacturing facilities in Norway and Sweden.
After the acquisition, OSO will operate independently and maintain its existing business partnerships, while leveraging LG’s global scale and resources.
TO WIDEN ITS LEAD FROM RIVALS
LG has decided to acquire OSO less than two months after its cross-town archrival Samsung Electronics Co. took over FläktGroup, a German manufacturer of HVAC systems and Europe’s largest HVAC system supplier, for 1.5 billion euros ($1.7 billion) in May.
That was Samsung’s biggest merger and acquisition deal since its $8 billion purchase of Harman International Industries Inc. in 2017, underscoring its strong commitment to winning the HVAC race.
The two Korean tech giants are making bold bets on HVAC as the global demand for these systems is forecast to surge with the rapid adoption of artificial intelligence worldwide.
The global HVAC market is projected to grow to $545.4 billion by 2034 from $301.6 in 2024, driven by a construction boom of logistics hubs and data centers, which require highly efficient HVAC solutions, according to Global Market Insights.
LG expects that integrating its advanced heat pump technologies with OSO’s products will further enhance its ability to deliver eco-friendly, high-efficiency HVAC solutions and boost its competitiveness in Europe, a key HVAC market due to the region’s strict climate and energy regulations.
According to BRG Building Solutions, the European heat pump market is expected to double from an annual sales of 1.2 million units in 2024 to 2.4 million units in 2030.
LG plans to offer integrated HVAC and water heating packages that deliver optimized solutions.
HVAC, A KEY GROWTH ENGINE
Since LG Electronics vowed in 2023 to transform the company into a platform-based tech giant from a home appliance leader, it has been aggressively expanding the business-to-business division, with a strong focus on HVAC products.
Its HVAC lineup covers residential and commercial air conditioners, as well as large-scale chillers for data centers, nuclear facilities and mega factories.
It plans to bump up the B2B business share in its total operating profit from 55% in 2024 to 76% in 2030 by boosting its sales from 39% to 52%. It aims to grow its HVAC business to 20 trillion won in 2030.
To ramp up its HVAC business, LG opened an HVAC research center in Frankfurt to increase sales in Europe, one of the world’s biggest heating system markets, last July.
It also set up a HVAC-dedicated business division, LG Eco Solution (ES) Company, late last year.
It currently runs HVAC system production facilities in key markets – the US, China, Thailand and Türkiye.
After landing a deal to supply its advanced chiller to Microsoft Corp.’s AI data centers earlier this year, LG has been seeking to win more HVAC orders from multinational companies.
By Eui-Myung Park
uimyung@hankyung.com
Sookyung Seo edited this article.
