Fri, Nov 19, 2004 - Page 10 News List

Synnex buys large stake in Redington

EXPANSION With growth slowing locally and sales of handsets dwindling in China, the purchase gives the company access to India's expanding market


Synnex Technology International Corp (聯強), Taiwan's largest computer and electronics chain, yesterday decided to purchase a major stake in an Indian electronics retailer as part of a greater plan to look for growth beyond the slowing home market.

Synnex's board passed a proposal to spend US$24 million, or US$1.59 a share, to buy a 36.3-percent stake in Redington Group, India's No. 2 computer and electronics retailer.

The move into the world's second fastest-growing market marked the company's first expansion since 1997, when it extended its business into other Asian areas, including China and Hong Kong.

"Synnex has been aggressively expanding in overseas markets in recent years as growth in the Taiwan market stagnates. And India is a market with great potential," Synnex president Evans Tu (杜書伍) told a press conference yesterday.

Sales from overseas affiliates and associated companies will increase further to make up half of Synnex's sales, with sales from the local market accounting for the other half, Tu said.

In 1997, overseas sales accounted for a mere 23 percent of total sales, according to the company.

Tu expects the company's sales to rise to above US$10 billion this year, from US$7.9 billion last year.

But, Tu said, he did not expect the new Indian investment to make a significant contribution in the short run.

He said Synnex would only see around NT$100 million from Redington next year.

Redington, headquartered in Chennai, reported sales of US$655 million in the fiscal year ended March.

It now owns 31 subsidiaries, 39 maintenance centers and 42 storehouses throughout India.

Redington also has branches in the Middle East and Africa.

The company's investment garnered a positive response from analysts.

"As growth in Synnex's Chinese units has started to slow due to dwindling demand for handsets made by Chinese vendors, the company has to look for new areas for growth," said Helen Chen (陳佩君), an analyst with Polaris Securities Co (寶來證券).

India, which has the second largest market for handsets after China, would give Synnex a boost in mobile phone sales, Chen said.

Synnex, which primarily sells computers and mobile phones for electronics vendors, plans to introduce more local brands into India, Tu said.

Indian consumers will be able to buy Asustek Computer Co's (華碩電腦) own-brand handsets and laptops under the Asus brand at Redingon's stores in addition to BenQ Corp's (明基電通) and Acer Inc's products, according to Synnex.

Synnex Technology's local subsidiary earned NT$1.93 billion, or NT$2.4 per share, in the first nine months, up from earnings of NT$1.75 billion a year ago.

Synnex's shares advanced 0.21 percent to close at NT$48.5 on the Taiwan Stock Exchange yesterday.

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