Bear Robotics IPO Rumors Lift LG Electronics Shares

[Korea Financial Times, Lee SungKyu] LG Electronics' share price responded to news that its U.S. subsidiary Bear Robotics may go public. Nothing has been finalized, but given LG Electronics' recent moves, the market appears to be treating the news as fact. LG Electronics has transferred its robotics business to Bear Robotics as part of an effort to concentrate resources on growth. Attention is now turning to whether LG Electronics' push into new businesses, as it moves away from traditional manufacturing, will pay off.

According to an electronic disclosure filed with the Financial Supervisory Service on September 7, LG Electronics stated that nothing has been decided regarding reports that its U.S. subsidiary Bear Robotics may list on the Nasdaq.

Even so, once the news broke, LG Electronics' share price surged as much as 11.33% intraday from the previous trading day, reaching KRW 226,000. The reaction reflects the high expectations the market already held for LG Electronics' robotics business.

LG Electronics acquired a 24.9% stake in Bear Robotics in March 2024 through a preferred-stock subscription agreement, bringing it in as an affiliate. In May 2025, LG Electronics exercised a call option under an existing shareholders' agreement to acquire an additional 36.2% in common and preferred shares, raising its total stake to 61.1% — a move that elevated Bear Robotics to subsidiary status.

After securing management control, LG Electronics transferred its own robotics business unit to Bear Robotics, placing years of accumulated commercial robotics technology, patents, sales assets and personnel under Bear Robotics and instantly boosting the subsidiary's scale.

In June, Bear Robotics announced the full acquisition of Kinisi Robotics, a UK-based developer of physical AI and real-time perception technology for robots. The deal is widely read as an effort to build out the profile of a global technology brand — acquiring a source-technology company in the UK to gain full recognition as an AI and robotics platform company in the global market.

Business Restructuring Raises Hopes, But Dual-Listing Risk Looms

As noted above, LG Electronics has transferred its robotics division to Bear Robotics — a move seen as groundwork to boost Bear Robotics' scale and revenue base and maximize its valuation ahead of a potential listing.

The process resembles a corporate spin-off. Rather than ruling out a listing, the odds of one appear to have increased.

Bear Robotics still requires large-scale R&D investment. To list on the Nasdaq, it will need to demonstrate further revenue growth and a narrower operating loss.

There is positive news as well. In January this year, international credit rating agency Moody's upgraded LG Electronics' credit rating one notch, from Baa2 to Baa1.

In the U.S. market, credit ratings are a key factor influencing both bond financing and IPOs, since the IPO process closely scrutinizes governance risk — specifically, the risk that a parent company's credit risk could transfer to a subsidiary. The higher a parent's credit rating, the better a subsidiary's prospects for a successful listing.

Business Transfer Resembles a Spin-Off — Parent Needs to Actively Manage Discount Risk

According to THE COMPASS, an AI platform built in-house by the Korea Financial Times, LG Electronics' dual-listing ratio stands at 14.3%. That is slightly below the average of 15.1%, but still high by global standards. If Bear Robotics does in fact list on the Nasdaq, LG Electronics' dual-listing ratio could rise well above the average.

One way to address this is through active shareholder returns, which can minimize investor backlash and offset discount risk.

Judging by the changes in LG Electronics' business structure and its profitability trends, this appears achievable. LG Electronics' free cash flow (FCF) swung from a deficit of KRW 644.9 billion in 2022 to a surplus of KRW 1.8 trillion the following year. In the first half of this year alone, FCF exceeded KRW 1.5 trillion, and on an annualized basis is expected to surpass KRW 3 trillion.

This is the result of a shift away from a manufacturing-centered model toward a "smart life solutions" company built around high-value-added B2B solutions and platforms. Return on invested capital (ROIC), a key gauge of improved operating efficiency, is projected to reach 12.2% this year on an annualized basis — numbers that reflect a strengthened core business.

Key indicators that weigh heavily on credit ratings are also solid. As of the end of the first half of this year, LG Electronics' interest coverage ratio stood at 6.62 times, sharply up from 4.22 times at the end of last year. Its EBITDA margin also entered double digits, reaching 10.5%.

An investment banking industry source said, "Given the groundwork LG Electronics has laid, we judge the likelihood of a Bear Robotics listing to be fairly high. Dual-listing concerns will inevitably surface, but the company can address them by promising strong shareholder returns — and keeping that promise." The source added, "Companies criticized over dual listings have largely brought it on themselves by focusing solely on the controlling shareholder's grip on the company. If the profits are shared with shareholders, dual listing itself should not become a problem."

Lee Sungkyu (lsk0603@fntimes.com)