[THE INVESTOR] Shares of LG Chem declined 5.8 percent on Sept. 6 after news reports about its planned merger with its drug-making sister firm LG Life Science.

The price closed at 251,500 won (US$227), down 5.81 percent from the previous trading day, with almost 1 trillion won in the company’s market value evaporating.

While LG Chem shares closed weaker on concerns among investors about merger costs, shares of LG Life Science saw its share price soar 5.1 percent.

The two firms confirmed related talks were underway in separate regulatory filings on the day.

“We are discussing diverse ways, including merger, but no details have been decided,” they said.

Based on the closing prices on the day, LG Chem’s market value was 16.66 trillion won, which compares to LG Life Science’s 1.16 trillion won.

Because of the more than 10-fold difference in their market capitalization, the merger plan can be approved by the board of directors without a separate shareholders’ vote.

If the merger plan is approved, LG Chem will add bio business to its current petrochemicals, materials and battery businesses.

By Lee Ji-yoon (jylee@heraldcorp.com)