Pegatron Technology Corp (和碩聯合), the manufacturing arm of netbook PC pioneer Asustek Computer Inc (華碩電腦), said yesterday that the company would work toward listing Asustek and Pegatron’s shares simultaneously next year to allay shareholders’ fears of being unable to trade Pegatron shares immediately after the spinoff is launched.
“We are moving toward listing both companies on the same day, but we need to clear regulatory matters first,” Pegatron CEO Jason Cheng (程建中) said.
Institutional investors are concerned about the spinoff move as they are banned from trading unlisted shares.
Asustek announced on Dec. 11 it would spin off its fully owned manufacturing arm Pegatron by lowering holding to 25 percent and reducing Asustek’s capital by 85 percent.
Under the deal, 1,000 Asustek shares will be split into 150 Asustek shares and 404 Pegatron shares.
There will be a blank period as Asustek will be relisted around July, while Pegatron — which is currently unlisted — could be listed at a later time.
Pegatron hopes the listing of both firms will occur on the same day, but a date has yet to be set, Cheng told an investor conference yesterday.
Asustek first announced its attempt to spin off its contract business in June 2007 amid growing client concerns that its brand image was too strong.
It elected to follow in the footsteps of Acer Inc (宏碁), which spun off its contract manufacturing and design unit into Wistron Corp (緯創) in 2002.
In January last year, Asustek spun off its electronics manufacturing division to two units: Pegatron Technology and Unihan Corp (永碩聯合).
“We felt ‘suffocated’ these two years, as the spinoff was only half-done,” Cheng said, adding that the company had lost orders amid client concerns about Pegatron’s heavy dependence on Asustek.
Pegatron executives also said that large projects would not come in easily next year as the spinoff move begins, but it aims to gain short-term projects next year while paving the way for greater business momentum in 2011.
They said that despite the fact that 60 percent of its sales derive from notebook production, Pegatron should not be viewed as a pure notebook manufacturer and compared to Quanta Computer Inc (廣達電腦) or Compal Electronics Inc (仁寶電腦).
Pegatron aims to reduce its notebook sales to less than 50 percent by 2011 by giving equal focus to the productions of consumer electronics and networking products, Cheng said.
While a spinoff might be the way to regain clients’ confidence, analysts said that Pegatron’s outlook next year remained uncertain.
“In the Acer-Wistron spinoff case, Acer aggressively outsourced orders to manufacturers other than Wistron to gain clients’ faith,” Macquarie Group Ltd analyst Daniel Chang (張博淇) said.
Pegatron’s profitability will be affected if Asustek — its biggest notebook client — slashes its orders next year, he said.
Asustek, the maker of Eee PC laptop computers, invested US$16 million in MStar Semiconductor Inc through subsidiary Asustek Holdings Ltd (華誠創投), the Taipei-based company said in an exchange filing yesterday.
ADDITIONAL REPORTING BY BLOOMBERG
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