Epistar Corp (晶元光電), the nation’s biggest LED chipmaker, yesterday said it would raise its holdings in Huga Optotech Inc (廣鎵光電) to 100 percent from the existing 48 percent via a share swap worth NT$3.47 billion (US$116 million).
The consolidation came as oversupply and sluggish demand brought most LED companies into the red in the first quarter and their outlook was dim amid persistent economic uncertainty in Europe.
The acquisition aimed to enhance the company’s efficiency and boost its competitiveness, Epistar said in a statement filed to the Taiwan Stock Exchange.
Epistar shareholders would obtain 4.85 Huga shares for each of Epistar common share, according to the statement. This offering means that Epistar will pay NT$12.68 per Huga share, a 1.44 percent premium, compared with Huga’s closing price of NT$12.5 yesterday.
Epistar will issue 56.45 million new common shares, totaling NT$3.47 billion, to Huga shareholders based on Epistar’s closing price of NT$61.5 yesterday.
The transaction is expected to be closed on Dec. 28.
Huga would become a fully-owned LED chip unit of Epistar and after that the company will be delisted from the local stock market.
Epistar said the deal would have a positive impact on the company’s profits and net value, because the company’s scale would expand and costs would be reduced.
The company will operate about 300 units of MOVCD machines after the transaction, making it the world’s No. 2 LED chipmaker.
Epistar lost NT$515 million in the first quarter, while Huga lost NT$57 million after booking NT$1.14 billion in losses for last year.