Fri, Sep 09, 2005 - Page 10 News List

Chunghwa Picture Tube shares rise on talk of merger

By Lisa Wang  /  STAFF REPORTER

Shares of Taiwan's No.3 flat panel maker Chunghwa Picture Tubes Ltd (中華映管) jumped nearly 3 percent yesterday on the news that its parent company was in talks to sell it.

Tatung Co (大同), which owns a majority 32 percent stake in Chunghwa Picture, is reportedly in share-sale talks with Hon Hai Precision Industry Inc (鴻海精密) and Quanta Computer Inc (廣達電腦).

Hon Hai and Quanta Computer both have liquid-crystal-display (LCD) panel manufacturing arms -- Innolux Display Corp (群創) and Quanta Display Inc (廣輝), respectively.

While the news has been in circulation among industry players for a while, a Chinese-language newspaper reported yesterday, citing Tatung president Lin Wei-shan (林蔚山), that the talks would be wrapped up within a month.

Tatung denial

Tatung, one of the nation's biggest television makers, yesterday denied the report and any plan to sell its stake of Chunghwa Picture.

"There is a misunderstanding. Tatung is concerned about the performance of Chunghwa Picture, but we have no plan to sell the company," Tatung spokesperson Ming Ho (何明芳) said in a phone interview.

Chunghwa Picture spokesman James Wu (巫俊毅) said: "We are keeping an open attitude about consolidation with other players. We have been in talks for possible mergers over the past three years, but no substantial conclusion has been reached yet."

Shares of Chunghwa Picture rose 2.87 percent, or NT$0.3, to NT$10.75 on the Taiwan Stock Exchange yesterday, outperforming the TAIEX, which rose 0.14 percent.

Tatung's shares also climbed 3 percent to NT$10.25.

"The sale would have a positive impact on the two companies, Tatung in particular, as it would get rid of a financial burden," said Bill Lan (藍新仁), a fund manager of Jih Sun Securities Investment Trust Co (日盛投信).

Chunghwa Picture posted a loss of NT$7.4 billion, or NT$1 per share, in the first half of this year after panel prices plunged on a supply glut.

Industry watchers and the government have been calling for consolidation among the nation's LCD screen makers to reduce risks in the highly cyclical and capital-intensive industry.

Timing

"The timing is good for flat-panel makers to undertake merger talks now, after posting huge losses [in the oversupply-driven downturn of the past few quarters]," said Frank Wang (王安亞), an analyst with Morgan Stanley.

"But, it's difficult to see any result," Wang said.

Tatung's sale of Chunghwa Picture, if it materializes, would mark the second merger in the nation's flat panel industry after Acer Display Technology Inc combined with Unipac Opto-electronics Corp (聯友光電) in 2001.

That deal created the nation's biggest LCD panel maker, AU Optronics Corp (友達光電).

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