Arrow Electronics bids to raise stake in Ultra Source

Arrow Electronics Inc, the world's largest distributor of electronic components and computer parts, yesterday launched a bid to acquire a stake of at least 7.75 percent in Ultra Source Technology Corp (奇普仕) at NT$37 (US$1.11) per share, as part of plans to turn the Taiwanese electronic components distributor into a wholly owned subsidiary.

Arrow Electronics, based in Melville, New York, currently owns 63 percent of Ultra Source after a cash tender offer of US$62.5 million in December 2005.

Partnering with Ultra Source to accelerate its business in the Asia-Pacific region, Arrow Electronics said on Thursday night that it wanted to purchase more outstanding shares of the Taipei-based company.

Outstanding shares refer to stocks currently owned by a company's officers and insiders, as well as those held by the public.

Ben Liu (劉明昶), spokesman of Ultra Source, confirmed yesterday in a phone interview that Arrow Electronics was planning to acquire 10.19 million shares, or 7.75 percent of Ultra Source, at NT$37 per share.

If the share purchase is successful, Arrow Electronics would seek to buy the remaining shares of Ultra Source, Liu said.

Ultra Source currently has more than 48.6 million shares issued, meaning Arrow Electronics needs to spend at least NT$17.98 billion (US$538.8 million) to fully own the company. The tender offer started yesterday and will end on July 6, he said.

The offering price of NT$37 per share represents a 1.23 percent premium on Ultra Source's closing price yesterday. Shares of Ultra Source advanced by 5.94 percent to close at NT$36.55 on the Taiwan Stock Exchange yesterday.

If shareholders of Ultra Source fail to participate in the share offer by the deadline, they can exchange their common shares for 2.83 preferred shares of Arrow Electronics, Liu said.

If all of the outstanding shares of Ultra Source were to be acquired by Arrow Electronics, the Taiwanese company would be delisted from the Taiwan Stock Exchange in accordance with stock exchange regulations, he said.

Company operations would not be affected by the planned acquisition, Liu said.

Founded in 1992, Ultra Source's after-tax earnings for the first quarter were NT$89.39 million, or NT$0.69 per share. Its sales for the first four months of the year increased by 37.61 percent to NT$8.3 billion.