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BenQ shareholders okay takeover of Siemens unit

Shareholders of BenQ Corp (明基), the nation's biggest mobile phone manufacturer, approved the acquisition of Siemens AG's money-losing handset unit during a special meeting in Taoyuan yesterday, despite some voicing doubts about the merger's effect.

About 65 percent of the shareholders attended the meeting yesterday, with 85.3 percent of those giving the thumbs-up to the merger deal. The deal, which was announced early last month, will take effect on Oct. 1 after BenQ obtained at least 75 percent of Siemens' transactions, BenQ chairman Lee Kun-yao (李焜耀) said.

"I cannot say I'm fully confident about the future, but [I'm] ambitious," Lee said, reflecting his somewhat aggressive attitude about the takeover deal.

As part of the deal, the German electronics giant will have to pay BenQ 250 million euros (US$302 million) -- 85 percent of that in cash and the rest in the form of assets and technology.

Siemens will also invest 50 million euros in BenQ shares, becoming the Taiwanese company's strategic shareholder.

"The business will break even next year the earliest," Lee said.

Shareholders also endorsed a plan to issue a global depositary receipt (GDR) at a maximum of NT$1.5 billion (US$47 million) around September or October, with a majority expected to be purchased by Siemens.

The Munich-based Siemens yesterday posted a 52 percent drop in third-quarter net profit because of losses in the mobile phone unit it is selling to BenQ. The company, which now shifts its focus to its more profitable industrial operations including power turbines and automation equipment, earned 389 million euros, or 42 cents a share, compared with 815 million euros, or 88 cents a share, in the same period a year ago, a news agency reported.

BenQ's chief marketing officer Jerry Wang (王文燦) said the company will integrate their respective advantageous retailing positions in European and Asia Pacific markets to sell mobile phones. The company expects to launch 14 to 15 new handsets under the co-brand BenQ-Siemens in the fourth quarter, he added.

It is worth noticing that after Lee flew to Germany recently to appease the opposition from the labor union, around 90 percent of the 6,000-strong workforce in Siemens' handset division decided to stay with their jobs. Lee stressed his determination yesterday, saying that the company will prove its abilities by achieving strong sales.
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