Tue, Oct 01, 2013 - Page 13 News List

Compal Electronics seeks to merge with subsidiary

By Helen Ku  /  Staff reporter

Compal Electronics Inc (仁寶電腦), the world’s second-largest contract laptop maker, yesterday said it planned to acquire the remaining shares in its handset subsidiary, hoping the offer will help it integrate the two companies’ resources and create a larger capacity.

The Taipei-based Compal said in a filing to the Taiwan Stock Exchange it plans to purchase 317.37 million shares of Compal Communications Inc (華寶通訊) on the open market at price of NT$50.8 per share, beginning today and running until Nov. 19.

Compal holds 47.78 percent of shares in Compal Communications. Including shares held by its other subsidiaries, Compal has a 49.9 percent stake in Compal Communications, according to the filing.

The merger plan is expected to be finalized no later than April next year, Compal said.

After that, Compal Communications will be de-listed from the main bourse and become a privately owned entity, the parent company said.

“Compal Electronics has had plans to merge with Compal Communications for a long time,” Compal spokesman Gary Lu (呂清雄) said by telephone.

Currently, Compal focuses on assembling traditional desktop and laptop computers, while Compal Communications provides more product design and manufacturing services for mobile device makers, Lu said.

As demand for handheld devices remains robust, Compal might increase its capital spending on smartphone or tablet product-assembling equipment after the merger is completed, he said.

Compal said it expects to see synergies from the merger.

“Compal can continue to cultivate its current business and strengthen key technology in wireless applications through this complementary and mutually beneficial business merger,” the company said in a statement.

The merger will improve supply chain management and integrate resources from sales and procurement to research and development and finance accounting, which will further reduce management costs and enhance Compal’s competitiveness, it added.

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