After an unsuccessful attempt three years ago, the merger of the nation's two largest karaoke chains has been resurrected in a bid to pave the way for synergy in Mandarin-speaking markets, company executives said yesterday.
The merger plan by Holiday Entertainment Co (好樂迪娛樂事業) and Cash Box KTV (錢櫃) will be submitted to the Fair Trade Commission tomorrow, Eric Lu (呂嘉正), spokesman of Cash Box, said yesterday.
"We will know if the deal gets the approval from the commission within a month," he said.
Merger details, such as stake holdings and board members, could only be ironed out by March next year at the earliest, when the financial reports of both companies are finalized, he said.
Lu shrugged off concerns of a possible monopoly should the firms join forces, saying they only command a combined 30 percent share of the local karaoke market including jukeboxes and karaoke lounges.
Boosted by the news, shares of Holiday yesterday soared to the daily limit to close at NT$21.95 on the Taiwan Stock Exchange.
Cash Box, which bought a 32 percent stake in Holiday in January 2003, announced plans to merge with the latter in April that year. Holiday planned to offer to swap 1.6 shares for every Cash Box share.
The Fair Trade Commission approved the deal in July 2003 but the permission expired on Jan. 1, 2004, after Cash Box failed to deliver the necessary documents to Holiday by the deadline of Nov. 17 2003.
The merger is expected to create synergy by integrating resources and management from both firms, in a bid to gain a stronger foothold in Taiwan, and in other Mandarin-speaking countries, said Echo Wu (吳致億), Holiday's spokesman, in a filing to the Taiwan Stock Exchange.
Holiday runs 57 outlets nationwide, with main locations in suburban areas to target the student market. Cash Box has 19 outlets situated in downtown locations to target office workers.
Both firms have also been aggressively marketing across the Taiwan Strait, with Cash Box opening 10 outlets and Holiday one.
Cash Box has set its sights on setting up five new stores in China; in Beijing, Shanghai, Changsha, Guangzhou and Xian, Lu said.
For the first 11 months of the year, Holiday posted revenues of NT$2.8 billion (US$86.8 million), down 14 percent from the same period last year, while Cash Box's sales decreased 20 percent to NT$4.3 billion.
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