(Yicai) Sept. 27 -- TCL China Star Optoelectronics Technology, a leading Chinese maker of liquid crystal displays, said it will buy LG Display's two LCD factories in Guangzhou for CNY10.8 billion (USD1.5 billion). The deal will help to consolidate TCL's global market position.

TCL CSOT will acquire 80 percent of LG Display's 8.5-generation LCDs panel plant and all of its LCD module factory, under the deal announced separately by parent company TCL Technology Group and the South Korean firm yesterday. The deal will likely be completed by the end of next March, they added.

LG Display chose Shenzhen-based TCL CSOT as the preferred bidder for its factories in Guangzhou early last month after a long search for buyers.

The 8.5-gen LCD plant mainly makes big television panels and has a monthly output of 180,000 units. It had a net profit of CNY600 million (USD85.6 million) on revenue of CNY6.3 billion (USD898.5 billion) last year. The module factory, which can produce 2.3 million units a month, logged a CNY536 million profit and revenue of CNY11.9 billion.

LG Display's Guangzhou factories mainly serve South Korean and Chinese TV makers, including Samsung Electronics, LG Group, and Skyworth Group, Zhang Hong, deputy general manager of the large-sized display division of Sigmaintell Consulting, told Yicai. The plants hold around 6 percent of the global LCD panel market, Zhang added.

With the LCD TV panel market having become highly saturated, Korean firms have shifted focus to more advanced and profitable display technologies such as organic light-emitting diodes. Their exit will likely lead to further consolidation, with Chinese producers such as BOE Display Technology and TCL gaining even more market share.

LG Display will retain some 8.5-gen LCD panel production lines in South Korea, primarily to meet the demand for notebook computers and monitors, Zhang said. However, the deal marks its complete exit from LCD TV panels after once being the largest supplier, Zhang noted.

BOE and TCL CSOT will produce 53 percent of LCDs globally after the transaction is wrapped up, according to a forecast by Sigmaintell. The market share of Chinese mainland makers will rise to 73 percent, with Zhang pointing out that this will change the supply landscape of the global LCD TV panel market.

In the long term, the deal between TCL and LG Display will further increase market concentration in the LCD panel industry, potentially helping to stabilize cyclical fluctuations and improve overall profitability, Zhang noted, but added that the short-term market impact remains to be seen.

LCD TV panel global prices have declined since July after rebounding in the first half of this year. To address the supply glut, China's three major panel makers -- BOE, TCL CSOT, and HKC -- plan to extend their holiday period by about seven days during the week-long National Day holiday that starts on Oct. 1.

Shares of TCL [SHE: 000100] closed 6 percent higher at CNY4.26 (61 US cents) each today. The broader Shanghai stock market climbed 2.9 percent.

Editors: Tang Shihua, Martin Kadiev