Hon Hai Precision Industry Co (鴻海精密) shares rose yesterday, as investors bet that the company’s new investment in a unit of South Korea’s third-largest conglomerate implies more room for growth for the company.
The stock closed 1.42 percent higher at NT$100 in Taipei trading, its highest in more than four years, after the company announced before the market opened that it had secured a 4.9 percent stake in an information technology services unit of SK Group for 380.975 billion won (US$376 million).
In a filing with the Taiwan Stock Exchange, Hon Hai said it bought 2.45 million shares of SK C&C Co at 155,500 won per share from Chey Tae-won, chairman of SK Holdings Co and the largest shareholder of SK C&C.
SK C&C shares ended at 166,500 won in Seoul trading yesterday, unchanged from the previous session.
Hon Hai said in the filing that the purchase was for “long-term investment.”
In a separate statement, the major assembler of Apple Inc’s iPhone and iPad said the investment would benefit current operations while supporting its efforts to develop new businesses.
The deal follows Hon Hai’s recent deal to merge its telecoms subsidiary, Ambit Microsystems Corp (國碁), with Asia Pacific Telecom Co (亞太電信) in a move to strengthen its presence in Taiwan’s 4G telecom services market.
Company chairman Terry Gou (郭台銘) is undertaking a multiyear corporate restructuring plan to transform the world’s largest contract electronics supplier into a technology-service provider.
At the company’s annual general meeting on Wednesday last week, Gou said Hon Hai is focusing on new businesses including broadband connectivity, cloud technology services, automation, robotics and products related to electric vehicles.
“We will launch new investment projects from the second half of this year through next year,” Gou told shareholders.
SK C&C was founded in 1991 and its headquarters are in Seongnam City, south of Seoul. Aside from SK C&C, the SK Group also includes top mobile carrier SK Telecom Co and SK Hynix Inc, the world’s second-largest memorychip producer.
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