LG Electronics share price down, headquarters raided by prosecutors

LG Electronics said that prosecutors raided its headquarters in Seoul on Friday amid accusations that executives from the South Korean company damaged rival Samsungs products while attending a trade fair in Germany.

Samsung claims that LG employees, including Jo Seong-jin, president of the companys home appliance division, vandalized several of its premium washing machines, which were displayed at two stores in September.

The raid comes ahead of the worlds largest Consumer Electronics Show in Las Vegas, scheduled on January 6. The upcoming event increased the already fierce rivalry between the two companies, which compete against each other in home appliances, television sets and smartphones. In their most recent dispute, the two electronics giants were arguing over their their respective 3D TVs and curved smartphones.

“We regret todays raid by prosecutors,” LG Electronics said in a statement. “Our company – a global company – was raided as a result of a rivals unilateral and excessive claims, and we are concerned that this would seriously undermine our corporate activities and external credibility,” it said.

LG launched a counter lawsuit earlier this month after Samsung officially said that employees from its rival deliberately damaged the doors of four premium Crystal Blue, the washing machines are sold for around $2 800. However, the Seoul Central District Prosecutors Office did not take any actions then.

The Prosecutors searched the offices of Mr. Jo and other employees, who have been involved in the incident, and seized secured documents and hard disks related to the IFA fair, according to people with knowledge of the matter. LG said that its home appliance factory in the southeastern city of Changwon was also raided.

However, Mr. Jo was not available for the Prosecutors questions during the raid and as a result LGs head of home appliance division has been banned from going outside the country. However, LG said that Mr. Jo has a very busy schedule and would be available for questioning after the Consumer Electronics Show.

LG also said that its employees did visit several Samsung shops in Berlin in order to conduct a market research. However, the company denied the claims that its staff damaged Samsungs products and said the washing machines door were poorly built.

LG lost 0.50% on Friday and closed at ₩59 600 in Tokyo, marking a year-to-date decrease of 12.74% .The company is valued at ₩9.75 trillion. According to the 37 analysts polled by the Wall Street Journal, with the majority of them rating the stock at “Buy”, shares have price targets at: high ₩110 000, median ₩90 000 and low ₩58 000.