Memorychip designer AP Memory Technology Corp (愛普科技) said it is to launch a NT$985 million (US$31.07 million) cash takeover bid for local rival Zentel Electronics Corp (力積電子) to expand into the Internet of Things (IoT) market.
The offer is the latest in a slew of mergers and acquisitions in the nation’s semiconductor industry, topped by a NT$128.7 billion acquisition bid by Advanced Semiconductor Engineering Inc (ASE, 日月光半導體) to absorb rival Siliconware Precision Industry Co (SPIL, 矽品精密).
AWAITING APPROVAL
ASE, the world’s largest chip tester and packager, is awaiting the approval of fair-trade authorities around the world before it can proceed with the transaction.
“AP Memory focuses on developing memory chips used in communications electronics, while Zentel has been good at developing niche memory chips for consumer electronics, networking devices and computer-related devices,” AP Memory chairman Brian Hsieh (謝再居) told a media briefing on Friday night.
“The two companies complement each other in terms of market segments,” Hsieh said. “The combination of the two companies’ research and development teams in Japan, the US and Taiwan would help us explore new business opportunities in the IoT market.”
AP Memory supplies its new low-power memory chips to handset chip designers MediaTek Inc (聯發科) and China’s Spreadtrum Communications Inc (展訊) for mid and low-end smartphones. The company’s largest revenue source is pseudo SRAM chips used in smartphones.
RESEARCH AND DESIGN
A tie-up with Zentel would significantly boost the company’s revenues, as it would help expand research and design capabilities as well as broaden chip portfolios and sales channels, AP Memory said.
AP Memory’s revenue next year might double from last year’s NT$2.6 billion if the acquisition deal is completed next year as planned, the firm said.
Zentel also made NT$2.6 billion in revenue last year, according to the company’s financial statement submitted to the Taiwan Stock Exchange.
AP Memory is offering to buy all outstanding common shares of Zentel at NT$14.5 per share, which would represent a 15.54 percent premium on Zentel’s closing price of NT$12.55 on Friday last week on the Taipei Exchange.
AP Memory plans to buy 50 percent of Zentel shares in the first of a planned two-stage acquisition process from tomorrow through Oct. 25.
AP Memory’s net profit soared 44.49 percent to NT$187.8 million in the first half, compared with NT$129.97 million in the same period last year, the company’s financial statements showed.
Gross margin improved to 36.48 percent in the first half from 35.04 percent in the same period last year, company data show.
Revenue increased 11.3 percent to NT$1.28 billion in the first half from NT$1.15 billion in the same period last year, the data show.
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