Lite-On Technology Corp (光寶科技), one of the nation's biggest makers of peripheral equipment for computers, yesterday announced a reduction in capital and an acquisition of a power supply company.
Lite-On said it would cut its capital by 30 percent, or an amount of NT$8.73 billion (US$266 million), to boost return on equity (ROE).
Lite-On's paid-in capital will be reduced to NT$20.37 billion and shareholders will receive NT$3 per share after the reduction takes effect on May 21 next year, the company said.
"We have excess cash and we want to reward our shareholders," Lite-On spokesman Andrew Lin (
He said the company had sufficient cash flow for mergers and acquisitions, and had decided to reduce capital to benefit stockholders.
Lite-On is not alone in cutting capital to boost ROE, with another recent example being Sunplus Technology Co (
Sunplus announced on Oct. 18 that it will halve its paid-in capital in the first quarter of next year and return NT$5.11 billion, or NT$5 per share, to its shareholders.
Lite-On said last Thursday that it aims to achieve a compound annual growth rate of 20 percent in sales for the next two years, driven by high-margin products.
The company -- whose core businesses are power supplies, computer chassis, light-emitting diodes and imaging products -- reported record third-quarter results with 11.7 percent gross margins and 5 percent operating margins.
Lite-On also announced yesterday it will acquire Li Shin International Enterprise Corp (力信興業) through a share swap, to strengthen its power supply capabilities.
The deal is tentatively sched-uled to be completed on July 30 next year, with one Li Shin share to be exchanged for 0.58 Lite-On shares.
"The companies complement each other in terms of clientele and technologies. The new acquisition will give us an edge in moving into [manufacturing] power supplies for liquid-crystal-display TVs," Lin said.
Lite-On acquired 20 percent of Li Shin's shares in May, as well as 35 percent of the latter's subsidiary, Logah Technology Inc (力銘科技).
Power supply revenues for Lite-On are NT$25 billion and will rise to NT$35 billion this year after combining contributions from Li Shin and Logah, according to a Lite-On statement issued last week.
Revenues this year will be double the NT$16.8 billion recorded in 2003, the company said.
News of the capital reduction was leaked during trading hours yesterday, which boosted Lite-On's shares by 6.4 percent to close at NT$44.6 on the Taiwan Stock Exchange.
Shares of Li Shin remained unchanged at NT$25.2.
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