The stock price of TV manufacturer Amtran Technology Co Ltd (瑞軒科技) surged to just under the 7 percent daily limit yesterday on speculation the company was in merger talks with the nation’s biggest electronics manufacturing service provider, Hon Hai Precision Industry Co (鴻海精密), which is looking to quickly expand into the TV manufacturing business.
Amtran has been at the center of speculation that it is an acquisition target for local flat-panel companies like Hon Hai, which owns panel and LCD monitor maker Innolux Display Corp (群創光電), as panel makers try to diversify into TV assembling to minimize price erosion during an overcapacity-driven downturn.
In December, rumors circulated that the nation’s biggest panel maker, AU Optronics Corp (友達光電), intended to buy Amtran to strengthen its TV manufacturing business. Before that, AU Optronics and Hon Hai reportedly attempted to buy a stake in Amtran by subscribing to NT$4 billion (US$126.04 million) of the TV maker’s corporate bonds in November.
Yesterday, Amtran had “no comment on market speculation,” a company public relations official said by telephone.
Amtran shares rose 6.96 percent to NT$36.1 yesterday, outperforming the benchmark TAIEX index, which edged 0.02 percent lower. The price of Hon Hai shares was unchanged at NT$137.5.
Amtran makes flat-panel TVs for other companies, primarily for its US TV affiliate Vizio Inc, in which Amtran holds a 23 percent stake. Hon Hai is also a shareholder of Vizio with an 8 percent stake.
“Hon Hai has ambitions to expand its TV business and an acquisition presents a shortcut for the realization of that goal,” said an analyst, who asked not to be named.
“Amtran is a good target because of its large scale and brand business,” he said. “However, such a deal does not look particularly attractive to Amtran’s major shareholders, as it probably won’t bring substantial benefits.”
Instead, there was the likelihood that Amtran could outsource its TV assembling business to Hon Hai, which just bought a TV plant in Mexico from Sony Corp, as Amtran was already looking for a new partner to replace local TV maker Tatung Co (大同), he said.
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