Hon Hai Precision Industry Co (鴻海精密), the world's biggest electronics parts maker, said yesterday it would buy an 8.89 percent stake in laptop battery pack supplier Simplo Technology Co (新普科技) for NT$1.43 billion (US$43.2 million).
The acquisition would pave the way for Hon Hai to enter the laptop computer assembly business, an analyst said.
Simplo would issue 16.5 million new common shares
Hon Hai said it would purchase 16.5 million new common shares that Simplo would issue through a private placement for NT$86.89 a share, according to the company's filing to the Taiwan Stock Exchange.
Simplo, the world's No. 2 maker of notebook battery packs, will have 166.5 million outstanding shares following the share issuance.
Hon Hai's offer represented a 35.63 percent discount to Simplo's closing price of NT$135 on the over-the-counter GRETAI Securities Market yesterday.
The purchase would be a "long-term investment," Hon Hai said in the filing.
Hon Hai would make the investment through its two venture capital units, it added.
Hon Hai would be Simplo's biggest shareholder after the deal is closed, replacing notebook computer maker Quanta Computer Inc (
The acquisition is an indication that Hon Hai is taking steps to enter the notebook computer assembly business, said Lu Chia-lin (
Hon Hai has been thinking about breaking into the laptop assembly industry, which is now dominated by Quanta and Compal Electronics Inc (
Besides, "Hon Hai scored a cheap deal. A 35 percent discount is quite big," Lu said.
Hon Hai's share price climbed 2.83 percent to NT$218 yesterday.
With the support of Hon Hai, Simplo would also ease concerns of any potential hostile takeover attempts, Lu said.
Separately, Simplo said yesterday it would pay out NT$1 in cash dividends and 45 percent in stock dividends, based on last year's earnings.
Simplo earned NT$139 million, or NT$9.82 per share, in net income, last year, up 36 percent from 2005. Revenues jumped 46 percent year-on-year to NT$16.3 billion last year.
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