Tatung considers merger following Teco-Sampo deal

Tatung Co (大同), a Taiwan-based manufacturer of computers and home appliances, may consider a merger with a local or international company, a Chinese-language news report said yesterday, citing Lin Wei-shan (林蔚山), president of the company.

In the report, Lin was quoted as saying that Tatung could seek a partner in the household appliance or computer sector.

The company is looking to expand abroad because of the limited size of Taiwan's market, Lin said.

On Tuesday, Teco Electric & Machinery Co (東元電機) offered to buy rival Sampo Corp (聲寶電子) for NT$24.2 billion (US$738 million) in shares and assumed debt, making it Taiwan's biggest maker of household appliances.

Teco said it will issue new shares, offering one of its own for every 1.3 of Sampo's 1.045 billion outstanding shares, valuing the stock component at about NT$16.5 billion. Teco will also assume NT$7.7 billion of Sampo's debt. The new company, renamed Teco-Sampo Co (東元聲寶), will commence operations on Sept. 1.

The merger of Teco and Sampo is expected to raise the new company's competitiveness and help reduce costs. Teco's chairman, Theodore Huang (黃茂雄), said the merger will allow the two companies to optimize the use of production equipment and manpower, while creating a sales network of more than 1,000 business outlets in Taiwan.

With competition building in the local computer and home appliance market, Lin said Tatung will work to strengthen its distribution channels in Taiwan.

Pending WTO entry for Taiwan is also motivating local companies to make their operations more efficient.