In a move that took analysts by surprise, Hon Hai Precision Industry Co (
Hon Hai announced that it would pay one of its shares for every 3.9 shares of Premier Image Technology Corp (普立爾), the company said in a statement submitted to the Taiwan Stock Exchange.
"After the merger of the two companies, we will be able to provide more diversified products for customers and create massive synergy by integrating resources," Hon Hai, headquartered in Tucheng (
The proposed acquisition -- worth around NT$30.3 billion (US$929.6 million) based on Hon Hai's closing price of NT$204 on Monday -- is the biggest electronics merger this year. In other words, Hon Hai would spend roughly NT$52.4 for each Premier share.
Premier currently has 5.8 billion in outstanding shares. The deal is scheduled to take effect on Dec. 1 this year, with Hon Hai to be the surviving entity.
"The price is quite reasonable as Hon Hai will pay about a 12 percent premium, which is quite low compared to the norm of 15 to 20 percent norm," said Lu Chia-lin (呂家霖), an analyst at Yuanta Core Pacific Securities Corp (元大京華證券).
Moreover, the acquisition is expected to expand Hon Hai's business in the consumer electronics sector and help sustain its revenue growth by diversifying the company's fortunes into the digital camera market, Lu said.
Hon Hai chairman Terry Gou (
"The Premier deal will also bring new orders for Hon Hai from top-notch Japanese optoelectronics brands such as Olympus and Pentax," Lu said.
Currently, Hon Hai makes PlayStation game consoles for Sony Corp and iPod digital music players for Apple Computer Inc, Lu said.
Over the past years, Hon Hai, which started as a computer connector maker, has been expanding its reach to new growth areas via mergers, like its rival Flextronics, Lu said.
Almost a year ago, Hon Hai bought a major stake in local handset maker Chi Mei Communication Systems Inc (
For Premier, which makes digital cameras for big brands including Japan's Sony Corp, the merger "will help expand their customer base and broaden their product portfolios," said company spokeswoman Lanie Ko (
Shares in Premier rallied almost to the 7-percent daily limit and closed at NT$47.1 yesterday on the Taiwan Stock Exchange in the wake of the announcement of the merger.
"The deal, which is a shock to me, will continue to boost Premier's share price in the next six months," said Helen Chen (
Standard & Poor's rating on Hon Hai will not be affected by the acquisition plan, the ratings agency said in a statement yesterday.
"Hon Hai's credit profile is unlikely to be affected, given the relatively insignificant size of this share-swap transaction and Premier's good operating margin and moderate leverage," the statement read.
Hon Hai shares tumbled 6.86 percent to NT$190 yesterday.
WASHINGTON’S INCENTIVES: The CHIPS Act set aside US$39 billion in direct grants to persuade the world’s top semiconductor companies to make chips on US soil The US plans to award more than US$6 billion to Samsung Electronics Co, helping the chipmaker expand beyond a project in Texas it has already announced, people familiar with the matter said. The money from the 2022 CHIPS and Science Act would be one of several major awards that the US Department of Commerce is expected to announce in the coming weeks, including a grant of more than US$5 billion to Samsung’s rival, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), people familiar with the plans said. The people spoke on condition of anonymity in advance of the official announcements. The federal funding for
HIGH DEMAND: The firm has strong capabilities of providing key components including liquid cooling technology needed for AI servers, chairman Young Liu said Hon Hai Precision Industry Co (鴻海精密) yesterday revised its revenue outlook for this year to “significant” growth from a “neutral” view forecast five months ago, due to strong demand for artificial intelligence (AI) servers from cloud service providers. Hon Hai, a major assembler of iPhones that is also known as Foxconn, expects AI server revenues to soar more than 40 percent annually this year, chairman Young Liu (劉揚偉) told investors. The robust growth would uplift revenue contribution from AI servers to 40 percent of the company’s overall server revenue this year, from 30 percent last year, Liu said. In the three-year period
LONG HAUL: Largan Energy Materials’ TNO-based lithium-ion batteries are expected to charge in five minutes and last about 20 years, far surpassing conventional technology Largan Precision Co (大立光) has formed a joint venture with the Industrial Technology Research Institute (ITRI, 工研院) to produce fast-charging, long-life lithium-ion batteries for electric vehicles, mobile electronics and electric storage units, the camera lens supplier for Apple Inc’s iPhones said yesterday. Largan Energy Materials Co (萬溢能源材料), established in January, is developing high-energy, fast-charging, long-life lithium-ion batteries using titanium niobium oxide (TNO) anodes, it said. TNO-based batteries can be fully charged in five minutes and have a lifespan of 20 years, a major advantage over the two to four hours of charging time needed for conventional graphite-anode-based batteries, Largan said in a
Taiwan is one of the first countries to benefit from the artificial intelligence (AI) boom, but because that is largely down to a single company it also represents a risk, former Google Taiwan managing director Chien Lee-feng (簡立峰) said at an AI forum in Taipei yesterday. Speaking at the forum on how generative AI can generate possibilities for all walks of life, Chien said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) — currently among the world’s 10 most-valuable companies due to continued optimism about AI — ensures Taiwan is one of the economies to benefit most from AI. “This is because AI is