Innolux Display Corp (群創光電), the world’s second-biggest maker of liquid-crystal-display (LCD) PC monitors, said yesterday it intended to acquire money-losing display maker TPO Displays Corp (統寶光電) in a NT$21 billion (US$651 million) share-swap deal to expand into the high-end smartphone panel business.
The deal could help lift Innolux’s ranking to No. 3 in the global mobile phone panel market next year after doubling its annual handset shipments to as much as 300 million units by combining its shipments with TPO, Innolux president Tuan Hsing-chien (段行建) told a press conference.
The consolidation would combine the strengths of both companies, allowing the firm to broaden its product and customer portfolios and create an economy of scale, the Miaoli-based company said in a statement.
SWAP
Each Innolux share will be swapped for eight TPO shares, the companies said, after the acquisition proposal obtained board approval yesterday. The transaction is scheduled to close on May 1.
“Growing customer demand for high-end LTPS [Low Temperature Polycrystalline Silicon] panels used in smartphones should be the main reason behind Innolux’s move to acquire TPO. The smartphone sector is one of the fastest-growing areas this year,” said Annabella Hsu (許美雯), a flat-panel analyst with International Data Corp.
TPO is the only panel maker in Taiwan that makes handset screens using LTPS technology. It only operates one 3.5-generation plant, which has experienced chronic losses.
“The offering looks quite reasonable, but we do not see the potential benefits of a merger as the handset business is not a major growth driver for Innolux,” said Dale Gai (蓋欣山), who tracks the flat-panel industry for Yuanta Securities.
“We are hoping to see more progress in its TV business. It is, instead, Compal Electronics Inc (仁寶) that risks being the biggest beneficiary after it rids itself of its unprofitable display unit,” Gai said.
TPO is a display affiliate of Compal, the world’s second-largest notebook computer maker on contract basis. Compal said it would hold a about 5 percent stake in Innolux after the deal wraps up.
LOSSES
TPO’s losses rose to NT$1.98 billion for the first half of this year, from losses of NT$1.24 billion a year ago, the company said in filings to the Taiwan Stock Exchange.
Innolux shares inched up 0.86 percent to NT$41, while TPO shares dropped 10.2 percent to NT$5.9 on the emerging market yesterday. Compal shares rose 2.49 percent to NT$39.10.
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