Chunghwa Picture's share acquisition in `the final stages'

Chunghwa Picture Tubes Ltd (中華映管), a Taiwanese maker of liquid-crystal displays (LCDs), is awaiting final approval to become Xiamen Overseas Chinese Electronic Co's (廈門華僑電子) biggest shareholder, helping the company tap rising LCD TV sales in China.

The stake purchase is "in the final stages" and needs approval from the China Securities Regulatory Commission, after China's State-Owned Assets Supervision and Administration Commission and Ministry of Commerce gave their consent, Su Zaiquan, a spokesman for Xiamen Overseas, said yesterday.

Wu Chun-yi (巫俊毅), a spokesman for Taipei-based Chunghwa Picture, declined comment.

Buying the stake in Xiamen Overseas, based in Xiamen, will help Chunghwa Picture expand in a market where domestic sales and exports of LCD televisions rose six-fold last year.

Xiamen Overseas, which sells flat-panel TVs domestically and exports to the US, Europe, and Middle East using the Prima brand name, may gain technical knowledge by getting Chunghwa Picture as an investor.

Chunghwa Picture also plans to invest US$200 million to build a factory for final assembly of LCD panels in Xiamen, and has signed an agreement with the local government, Su said.

Xiamen Overseas won't be under obligation to buy panels from the factory, he said.

Taiwan bars the nation's companies from investing more than 40 percent of their net worth in Chinese companies.

The government in April lifted a ban to allow Taiwanese firms to invest in China to produce flat-panel displays measuring four inches or less diagonally.

Under these rules, Taiwanese companies must have management control of China ventures and have corresponding investments at home.

Chunghwa Picture's 310.8 million yuan (US$39 million) acquisition of a 32.6 percent stake was first announced by Xiamen Overseas in December last year.

Domestic sales and exports of Chinese-made LCD TVs rose to 4.2 million units last year from 700,000 units a year earlier, according to Beijing-based research company CCID Consulting Co.

Shares of Chunghwa Picture Tubes gained 3.7 percent to NT$7.37 at the 1:30pm close in Taipei, after rising as much as 5.5 percent.

The stock has dropped 27 percent this year, compared with a 2.1 percent gain in the benchmark TAIEX index.

Trading in Xiamen Overseas shares has been suspended since June 30, pending announcement of the company's plan to convert previously non-tradable shares into common stock as part of government efforts to improve corporate governance.

The company has not disclosed when its stock, which last closed at 5.32 yuan, may resume trading.