The nation’s two largest flat-panel makers may need to address their debt problems before moving toward a potential merger, an Industrial Development Bureau (IDB) official said yesterday.
The official, who declined to be named, made the remark after Minister of Economic Affairs Chang Chia-juch (張家祝) on Friday last week said that Hon Hai Precision Industry Co (鴻海) chairman Terry Gou (郭台銘) had talked to him about a merger between Innolux Corp (群創光電) and AU Optronics Corp (AUO, 友達光電).
According to Innolux’s and AUO’s latest financial reports, the companies borrowed a total of NT$400 billion (US$13.2 billion) in loans from local banks as of last year.
Of the debts registered by the two companies, up to 75 percent — about NT$300 billion — were loans granted from state-run banks.
“The question to be addressed at the negotiating table is the companies’ debt,” the official said.
Innolux yesterday said in a filing to the Taiwan Stock Exchange that it welcomes any opportunity that can enhance shareholders’ interests, while AUO said in a separate filing that its doors are always open to merger or acquisition opportunities.
“However, we have no such plan in hand,” AUO said.
Shares in AUO closed up 3.85 percent at NT$10.25 in Taipei trading yesterday, while those of Innolux closed down 1.83 percent at NT$10.75. The benchmark TAIEX fell 0.48 percent.
Due to falling average selling prices of panels in the global market amid intensifying competition from firms in South Korea and China, Innolux performed poorly financially before being acquired by Hon Hai in 2009.
Last year, the Miaoli County-based company swung back to profits after four consecutive years of losses, with annual net profits totaling NT$5.1 billion or earnings per share of NT$0.57.
AUO posted net profits of NT$4.25 billion for last year, with earnings per share of NT$0.45.