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LG Chem to Acquire U.S. Desalination Membrane Innovator NanoH2O

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March 17 (Bloomberg) -- NanoH2O Inc., a manufacturer of reverse-osmosis membranes that purify seawater to drinking quality while lowering the cost of desalination, is being purchased by Seoul-based LG Chem Ltd. for $200 million.

The Southern California startup, established in 2005 from research that stemmed from the University of California at Los Angeles, makes water potable from fresh, brackish and saltwater sources. The acquisition is expected to close next month, LG Chem said in a filing to the Korea Exchange on March 14.

The purchase takes place amid record drought from California to southeast Asia and rising water-scarcity issues. NanoH2O, whose nanocomposite and polymer technologies improve energy-efficiency and power costs in water production, has been backed by investors including Khosla Ventures, Oak Investment Partners, BASF Venture Capital GmbH, Total Energy Ventures International and the China-focused fund Keytone Ventures.

NanoH2O agreed in 2013 to build a plant on the Yangtze River delta at Liyang, China, that’s due to be completed later this year. With the second-largest economy, China is one of the biggest desalination markets in the world.

LG Chem’s board of directors approved buying NanoH2O to boost its water-treatment filter business, according to the March 14 statement. The Korea Economic Daily and Yonhap News Agency earlier reported the deal. A call and e-mail to NanoH2O for comment wasn’t returned.

To contact the reporter on this story: Randall Hackley in London at rhackley@bloomberg.net

To contact the editors responsible for this story: Stuart Biggs at sbiggs3@bloomberg.net Iain Wilson, Andrew Hobbs

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