BenQ insists it is prepared to fend off any hostile bid

BenQ Corp (明基), Taiwan's biggest mobile phone maker, yesterday said it would block any hostile takeover attempt amid growing speculation about buyout interest from the Hon Hai Group (鴻海集團) and several unspecified private fund groups.

Debt-ridden BenQ has become a buyout target as the company's shares have fallen due to heavy losses in the wake of the purchase of Siemens AG's unprofitable handset unit in October last year.

Shares of BenQ were down 0.84 percent to NT$17.8 on the Taiwan Stock Exchange yesterday, underperforming the TAIEX's 1.25 percent gain. The stock is trading at a historical low, or 0.8 of its price-to-book ratio.

Buyers could gain a controlling stake in the world's third-largest flat-panel maker AU Optronics Corp (友達光電) through purchasing BenQ, which owns about 10-percent in AU Optronics.

"We will not welcome, nor accept any hostile takeover bid," said Hank Horng (洪漢青), president of BenQ's Taiwanese branch, citing chief financial executive Eric Yu (游克用).

Yu's comments came as Chinese-language newspaper reports said that Hon Hai, which owns the nation's biggest electronics component maker, Hon Hai Precision Industry Co (鴻海精密), and flat-panel maker Innolux Display Corp (群創光電), was buying up BenQ shares with a plan to take over the firm.

"We are well-prepared [to evade any hostile takeover attempt]," Horng added.

BenQ chairman Lee Kun-yao (李焜耀) told reporters last month that several private fund groups were interested in investing in BenQ without providing details. However, the company was not in any buyout talks with private fund groups, he said.

The five-year-old handset maker said it has NT$9 billion (US$277 million) in cash on hand in spite of heavy losses over the past years.

To further improve its financial situation, BenQ told investors that it planned to raise NT$10 billion over the next 12 months by selling non-core investments and fixed assets to repay debt.

The company said in late September that it would stop pouring funds into the money-losing German unit, BenQ Mobile, which it took over from Siemens. BenQ Mobile is under receivership in Germany after filing for insolvency.