Earlier today it was reported by various sections of the media that Google is going to acquire a substantial stake in LG Electronics, Mountain View was reportedly going to take a 35 percent stake in the company worth close to $2.2 billion. LG’s stock soared substantially following this news but the company later had to issue a statement to rubbish this rumor and reiterate that Google is not investing in LG Electronics.
It didn’t take long for LG’s stock to shoot up once the rumor hit the wires, during the day it was up as much as 14 percent before LG spokesman Ken Hong said that the rumor was “complete speculation.”
At close LG’s stock ended up 3.07 after coming down from the initial rally that was primarily fueled by the prospection of a multi-billion dollar investment from Google. The Mountain View company has not yet commented on the matter.
Even though the rumor had no basis in fact it’s not impossible for Google to do something like this, the company has close to $70 billion in cash so in theory it is more than capable of acquiring such a major stake in LG Electronics.
What would Google do though after putting in so much money into the company? Google has closely partnered with LG many times in the past on Nexus devices and it’s even collaborating with the company on Project Tango. With Google selling Motorola a couple of years back it wouldn’t entirely make sense for it to bet on a hardware company quite so soon.