[THE INVESTOR] Tech giant LG Electronics has denied rumors that it plans to acquire Korea’s third-largest smartphone maker Pantech.

Local news outlet Aju Business Daily reported on May 8 that LG is in talks with Pantech for a series of new partnerships. Some of the plans under consideration include the acquisition of Pantech, sale of only the budget smartphone business division, and supply of mid-range and low-end smartphones to LG.

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LG denied the news report in a statement on the same day, saying the rumors are “groundless.”

The two firms were rivals for second spot in the local market in the pre-smartphone era. The scales have been tilted in favor of the deep-pocketed LG in recent years. After it went bankrupt in 2014, Pantech was acquired by a consortium led by electronic parts developer SOLiD and local IT company Optis in late 2015.

Despite efforts to regain its past glory, Pantech has continued to make losses in the smartphone segment.

LG, the second largest player in the Korean smartphone sector after Samsung Electronics, has also been struggling as its flagship smartphone models have failed to appeal to consumers.

Its smartphone business arm posted an operating loss for the eighth consecutive month in March this year. The operating loss of mobile business unit, which reached 467 billion won (US$412.53 million) in the fourth quarter, was 200 million won during the first three months.

Some market watchers speculated that LG’s rumored acquisition plan is aimed at shifting its focus to the low-end segment from premium segment, in which its rivals Samsung and Apple have been taking the lead.

An unnamed industry source was quoted by Aju Business Daily as saying that “LG’s possible acquisition of Pantech, which was considered as a mere rumor, has recently gained traction.”

“LG is also said to be planning to bring some change to the list of its suppliers to procure electronic parts (in line with the looming acquisition deal).”

Upon news of the rumored acquisition, LG stocks increased 6 percent to 76,000 won in early morning trading on May 8.

By Kim Young-won (wone0102@heraldcorp.com)