LG Chem Ltd, South Korea's largest chemical company, said Friday that it has decided to purchase a U.S. water filter firm for $200 million.

A corporate source said the company's board approved the purchase of California-based NanoH2O, Inc. that controls cutting-edge reverse osmosis (RO) membrane technology.

"The process of buying the company will start immediately," said the insider, who declined to be identified. He said LG Chem will wholly own the venture tech company.

NanoH2O manufactures and markets RO membranes that lower the cost of desalination.

LG Chem said that the U.S. firm holds an outstanding patent in water processing and its filter technology is superior to those of its rivals. It said the company that started the commercial production of membranes in 2010 has been making top-notch products that are sold to 33 countries worldwide.

It said the RO products have a proven track record of filtering water in an effective manner.

The South Korean company said by buying NanoH2O, it can maximize its capabilities and knowhow in the chemical material design field and industrial coating technology areas.

It said the the RO membrane markets are expected to grow an average 23 percent annually in the coming years, and become a $2.4 billion industry by 2018.

At present, an industrial partnership between Japan's Nitto Denko-Toray Industries; NanoH2O; and Dow Chemical Co., another U.S. company, effectively controls 80 percent of the world's RO membrane market.

(Yonhap)