TPK Holdings Co Ltd (宸鴻), which supplies touch panels for Apple Inc’s iPad and iPhone, said yesterday it planned to buy about a 20 percent stake in a local touch sensor maker for NT$5.58 billion (US$193 million) in cash to better manage the supply of the critical component.
TPK said the board has approved the acquisition of 180 million shares of Cando Corp (達虹科技), a touch sensor subsidiary of the nation’s second-biggest LCD panel maker, AU Optronics Corp (友達光電). Cando is one of TPK’s major touch sensor suppliers.
“The acquisition will help boost efficiency of the company’s supply chain. The supply of touch sensors has been tight for some time and any technological problems in the supply chain will affect shipments,” TPK financial executive Freddie Liu (劉詩亮) told a media briefing.
TPK agreed to pay NT$31 per Cando share, representing a 32.5 percent premium on Cando’s closing price of NT$23.4 on Tuesday on the Emerging Stock Market, which Liu said was “not high,” as similar mergers and acquisitions in the industry usually offered premiums of up to 38 percent on average.
After the acquisition, TPK, which also makes touch sensors, will jointly command one-third of the world’s touch sensor market, the company said. The transaction is expected to be finalized within two months. TPK hopes to obtain three seats on Cando’s nine--member board.
The touch panel maker is arranging syndicated loans to finance the acquisition.
AU Optronics said in a filing to the Taiwan Stock Exchange that it would gain NT$2.99 billion from selling 122.3 million Cando shares to TPK Universal Solutions Ltd, a subsidiary fully owned by TPK.
Cando primarily makes touch sensors used in tablet devices. The Hsinchu-based company lost NT$894 million last year, reversing net profits of NT$44.85 million in 2009, according to the company’s financial statements filed to the Taiwan Stock Exchange.
Liu also downplayed concerns about an oversupply in the touch panel industry.
“People are nervous about a supply glut amid an increase in capacity expansion industrywide,” Liu said. “But this is a totally different game from the LCD industry. Yield is the key. Not every company can turn most of their capacity into shipments.”
Shipments of touch panels are expected to grow by 34.3 percent to 951 million units this year, -compared with 708 million units last year, with nearly half of the amount supplied by Taiwanese manufacturers, Taipei-based research house Topology Research Institute (拓墣產業研究所) said.
“Tablet devices will take over smartphones as the next growth driver of touch panels because their screens are usually six times bigger than a smartphone’s,” Topology analyst Harrison Po (柏德葳) said at a seminar arranged by the research firm.
Shares of TPK jumped 1.24 percent to NT$898 yesterday, outperforming the benchmark TAIEX, which inched up 0.68 percent.