SEOUL, April 12 (UPI) -- South Korea's lithium-ion battery maker, SK Innovation, agreed to pay $1.8 billion to its cross-city rival, LG Energy Solution, to avoid a 10-year ban in the United States related to misappropriated trade secrets.
Under the deal, the two companies said Sunday they will withdraw all pending legal disputes in the United States and South Korea. They also agreed to a 10-year non-assertion, wrapping up their two-year legal brawl.
The announcement came just before the deadline for the U.S. government, which had to decide whether to veto the International Trade Commission ruling on SK Innovation before Monday.
On Feb. 11, the U.S. trade panel ruled against SK Innovation, which is accused of stealing trade secrets related to electric vehicle batteries from LG Energy Solution. SK innovation was banned from producing batteries in the United States for 10 years.
The bilateral settlement will also affect Ford and Volkswagen, which are SK Innovation's major customers in the United States, the world's second-largest automotive market.
"LG Energy Solution and SK Innovation have decided to settle to compete in an amicable way, all for the future of the U.S. and South Korean electric vehicle battery industries," the firms said in a joint statement. "We are dedicated to working together to support the Biden administration's climate agenda and to develop a robust U.S. supply chain."
LG Energy Solution has reportedly sought compensation amounting to roughly $2.7 billion, while SK Innovation offered less than $1 billion. They ultimately met halfway.
SK Innovation will pay $900 million in cash and $900 million in royalties to LG Energy Solution.
The South Korean government has requested that the two competitors settle the long-lasting conflicts as soon as possible. In particular, South Korean Prime Minister Jung Se-kyun iterated that the disputes caused big losses for the country.
"Although it was late, I greatly welcome the measure," Jung said in a Facebook post Sunday. "The government will proactively support the industries to improve the competitiveness of the country's battery and electric vehicle businesses."
According to some reports, the U.S. trade representative has urged the two Korean firms to make the out-of-the-court settlement.
"For the stable supply chain of electric car batteries, the U.S. needs both LG Energy Solution and SK Innovation. Hence, the settlement is also good for the U.S. government," NH Investment & Securities analyst Hwang Yoo-shik told UPI News Korea. "For the two companies, the agreement is a win-win solution. In particular, SK Innovation can breathe a sigh of relief because $1.8 billion is manageable for the company."
Meritz Securities analyst Noh Woo-ho agreed.
"SK Innovation could clear up a major source of business uncertainty in the U.S.," he said. "From the perspective of LG Energy Solution, it will secure enough cash to make investments in the future."
The share price of SK Innovation jumped almost 12 percent between Friday and Monday, while that of LG Chem -- the parent company of LG Energy Solution -- edged up by 0.62 percent.