BenQ Corp (明基), a leading electronics maker in Taiwan, yesterday said it would sell its optical storage unit, including facilities and patents, to local rival Lite-On IT Corp (建興電子) for NT$1.2 billion (US$37 million) plus a 13 percent stake in the company.
The deal will make BenQ the second-largest shareholder in the nation's biggest optical-drive maker, and lift Lite-on IT's global market share to 27 percent, making it the world's second-biggest optical-drive maker.
The alliance is BenQ's latest move in the re-focusing of its brand operations, and part of its greater efforts to boost profitability and generate more cash flow by streamlining non-core product lines -- which include pulling out of the domestic digital music player market, and the farming out of more production to trim costs.
"BenQ will focus more on marketing its own-brand products in the future," the company said in a statement released yesterday.
Lite-On IT, the world's No. 5 maker of optical drives, would add BenQ to its client portfolio, which includes Japanese electronics giant Sony Corp. Lite-On IT would also pay an extra small amount of money for BenQ's equipment.
The deal will be closed by June 1, BenQ said.
"We have been adjusting [our non-core business]. We are looking for the optimal operational pattern by concentrating our resources," BenQ chairman Lee Kun-yao (李焜耀) told a press conference yesterday.
But Lee said the deal would not help the company break even ahead of schedule in the final quarter of this year.
The disk-drive unit accounted for just 6 percent of BenQ's total revenues of NT$162.3 billion last year.
"The acquisition of Siemens AG's ailing mobile device unit hastened BenQ's pace in dealing with its non-core businesses as it needs to concentrate on turning around the handset business," said Helen Chen (陳佩君), an analyst with Polaris Securities Co (寶來證券).
The latest restructuring effort means that BenQ would take a more aggressive approach to selling branded cellular phones after fixing its non-core businesses, Chen said.
"This will have a positive impact on BenQ in the long run," she said.
Mobile phones made up half of BenQ's revenues in the final quarter of last year after the purchase of Siemens AG's handset unit last July. The firm posted pre-tax losses of NT$5.3 billion, or NT$2.16 a share, for last year, dragged down by the handset unit.
For Lite-On IT, the transaction would help the company reduce the erosion of the price of DVD recorders after it receives BenQ's orders, Chen said.
The deal is expected to boost Lite-On IT's revenues for this year from between NT$5 billion to NT$10 billion, Lite-On IT president Danny Liao (廖學福) said. Last year, Lite-On IT posted around NT$50 billion in revenues.
Shares in BenQ and Lite-On IT rallied by 1.27 percent and the 7 percent daily limit, respectively, to reach NT$27.85 and NT$41.35 on the Taiwan Stock Exchange yesterday.
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