Ending a two-year legal spat over battery technologies, SK Innovation agreed on Sunday to pay about 1.8 billion U.S. dollars to LG Energy Solution.
Around half will be paid in cash installments over 24 months, and the other half will be paid in royalties over five to six years, starting 2023.
The two companies also agreed to withdraw all other pending litigation, both home and abroad, and not to raise further legal complaints for the next 10 years.
The agreement between the two Korean battery makers comes hours before an import ban on SK Innovation was set to take effect.
In February, the U.S. International Trade Commission sided with LG after the company accused SK of illegally acquiring trade secrets related to electric vehicle batteries.
The ITC had issued a 10-year-import ban on SK Innovation but allowed shipments of battery components for Ford and Volkswagen electric vehicles.
The latest settlement now allows SK to continue its operations in the U.S. and to finish building a 2.6 billion dollar EV battery plant in Georgia which is expected to create about two,six-hundred jobs.
Industry watchers say the latest agreement allows the two Korean battery makers to reap the benefits of the growing electric vehicle market in the U.S.
"For LG, it is an opportunity to expand partnerships with other U.S. auto companies, not just GM. While for SK, the latest settlement clears uncertainty over its battery business in the U.S. market, allowing it to further invest and expand business in three important regions, China, Europe and the U.S."
Sunday's agreement has been widely welcomed by the leaders of Seoul and Washington.
In a social media post on Monday, President Moon Jae-in said the settlement was "very meaningful" in that it serves the long-term interests of both companies as well as the interests of the nation.
A day earlier, U.S. President Joe Biden also praised the deal, calling it a win for American workers and the American auto industry.
The settlement appears to be a big win for Biden who recently unveiled plans to boost the electric vehicle market.
Min Suk-hyen, Arirang News.