Lite-On plans to merge with local auto parts producer

Lite-On Technology Corp (光寶科技), one of the nation's biggest computer peripherals makers, will merge with a local auto parts maker via a share swap, as part of its efforts to diversify into the fast-growing auto electronics area, a company official said yesterday.

The acquisition of Stark Technology Inc (敦揚科技) is the company's latest effort to build up its presence in the automobile parts industry, after making significant inroads into the industry by incorporating a semiconductor affiliate of local car maker Yulon Group (裕隆) in late 2004.

"Through the acquisition of Stark Technology, we aim to boost our strength in the car electronics components area," Ancel Lee (李安石), a vice president of Lite-On, told the Taipei Times in a phone interview.

Lite-On is one of several electronics manufacturers, including Hon Hai Precision Industry Co (鴻海精密) and Asustek Computer Inc (華碩電腦), which have decided to aggressively enter the promising auto-electronics industry.

Stark Technology makes a wide range of auto components including LED (light-emitting diodes) auto light modules.

Lite-On will boost its holdings in Stark Technology to 100 percent from roughly 18 percent through the share swap, according to the company statement.

One Lite-On share will be exchanged for 1.7 Stark Technology shares, the statement said.

The merger is scheduled to close by the end of August, it said. To cope with the merger, Lite-On plans to issue 26,000 new shares.

Growth areas

Lite-On, which gets almost half its revenues from selling computer monitors, said it has been looking for new growth areas outside the PC sector.

"We believe the sector will be the next growth engine. We are trying to expand to areas related to our core business," said Elaine Su (蘇怡任), a company spokesman.

Sales of the world's auto electronics will grow to US$163.46 billion in 2008 from US$134.13 billion last year, according to a forecast by the Boston-based consulting firm Strategy Analytics.

CLSA Ltd analyst Vincent Chen (陳豊丰) in the middle of last month gave Lite-On a "buy" rating with a 12-month target price of NT$50.7, which implies a 13 percent upside from the stock's closing price of NT$44.8 yesterday.

Chen forecast that Lite-On earnings would climb around 18 percent to NT$10.38 billion this year from NT$8.82 billion last year.