Reversing more than two months of gains, Taiwan-based audio electronics maker Merry Electronics Co’s (美律) shares plummeted yesterday following the company’s announcement on Monday that it is to sell a 25 percent stake to Chinese connector supplier Luxshare Precision Industry Co (立訊).
Following the announcement, many investors cashed in on previous gains, dealers said.
Merry’s products include headsets, speakers, microphones, batteries and personal sound amplifiers.
Merry shares yesterday fell by the 10 percent daily maximum to close at NT$65.8 per share in Taipei trading, while the weighted index ended down 1.31 percent at 8,343.86.
Merry shares had risen more than than 80 percent since the beginning of October on acquisition rumors.
The selloff also reflected an 18 percent discount on the stock’s closing price on Monday, dealers said.
Luxshare has agreed to buy a 25 percent stake in the company for NT$3.78 billion (US$114.42 million), representing a price of about NT$60 per share, Merry said in a statement.
After the acquisition, Luxshare would become Merry’s largest shareholder and take three seats on the Taiwanese company’s seven-seat board of directors, but its management would still have controlling power, Merry said.
Merry said it has scheduled a special general meeting for Jan. 22 to seek shareholders’ approval for the acquisition.
If the deal is approved by its shareholders, the company plans to submit an application for regulatory approval to the Investment Commission, Merry said, adding that it expects the deal to be settled in the first half of next year.
The move to bring in Luxshare as a strategic partner is aimed at securing funds for expansion through a technical upgrade and increase in production capacity, Merry said.
Luxshare, which is listed as an “A” stock in China, is one of Apple Inc’s China-based suppliers and is one of the largest connector makers in the Chinese market, Merry said.
Many high-tech firms in China are eyeing Taiwanese companies as acquisition targets.
In October, IC packaging and testing firm Powertech Technology Inc (力成) signed a deal to sell a 25 percent stake to China’s Tsinghua Unigroup (清華紫光).
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