MiTAC International Corp (神達電腦), which owns the world’s third-largest portable navigation device (PND) maker, yesterday said it has signed an agreement with rival Magellan Navigation Inc to buy the US company’s PND operation for US$96 million, aiming to boost its presence in the US, the world’s fastest-growing PND market.
The deal comes at a time when the global economic crisis has seriously battered the sales of a wide range of consumer electronic gadgets. MiTAC makes PNDs for its brand-name business Mio Technology Ltd (宇達電通), as well as other companies including Magellan.
Under the agreement, MiTAC will obtain Magellan’s PND assets including software, patents, trade mark, intellectual property rights, the management team, customers and retailing channels, MiTAC said in a statement filed to the Taiwan Stock Exchange.
The deal “will effectively boost MiTAC’s product sales and competitiveness in the North American satellite PND market,” MiTAC president Billy Ho (何繼武) said in the statement.
MiTAC did not reveal any financial arrangement yesterday. The transaction will be closed next month, the statement said.
Magellan, the third-largest PND vendor in North America, saw its market share in the US drop to 11 percent in the second quarter of this year from nearly 21 percent a year ago, market researcher Canalys said. Magellan shipped 411,940 PNDs in the second quarter to the US.
Based on its latest research, Canalys estimated that global shipments of PNDs in the third quarter rose 14 percent year-on-year to 8.8 million units, with North America and the Asia-Pacific region still seeing good volume growth, of 49 percent and 25 percent respectively.
Tracking far behind, Mio, ranked No. 4, only has 4.5 percent share of the US PND market in the April to June quarter, inching up from 4.1 percent from the same period last year, Canalys said.
“The deal will help Mio increase its US market share after obtaining the Magellan brand as Mio only has a marginal role in the market,” said Lucy Ho (何心宇), a PND industry analyst with Market Intelligence Center (資訊市場情報中心).
But, Magellan’s weak financial situation could be a concern for MiTAC investors as the financial problem has caused losses both in market share and orders over past quarters, Ho said.
MiTAC planned to keep the three PND brands, Magellan, RoadMate and Maestro. MiTAC now sells PNDs under the Mio and Navman brands in Europe and US.
MiTAC’s net income more than halved to NT$1.73 billion in the first nine months this year, compared to NT$4.05 billion earned a year ago. Revenues fell 21 percent year on year during the same period.
Shares of MiTAC jumped 6.82 percent to end at NT$11.75, outperforming the benchmark TAIEX index, which gained 2.96 percent yesterday.