Taiwanese companies are stepping up their global mergers and acquisitions (M&A) activity.
The US$2.63 billion they spent on overseas transactions last quarter might have been a record high, international law firm White & Case LLP said.
M&A transactions by Taiwanese firms investing abroad last year reached a record high of US$7.25 billion in 28 deals, the law firm said in a report last week.
The volume of deals is the third-highest ever, down from a peak of 38 in 2016, the report said.
One deal notable for its ambition to diversify abroad is Foxconn Interconnect Technology Ltd’s (FIT, 鴻騰科技) planned purchase of US-based Belkin International Inc, which was announced in March.
Through the acquisition, which was valued at US$866 million, FIT would expand its access to brands within the PC, mobile accessories and smart home equipment industries, White & Case said.
FIT is a subsidiary of Hon Hai Precision Industry Co (鴻海精密), which is no stranger to using acquisition as a tool to diversify its business, the law firm said.
In 2016, Hon Hai initiated a US$3.1 billion takeover of Japanese display maker Sharp Corp, which is the largest announced takeover of a foreign firm by a Taiwanese bidder.
The Belkin deal would need approval from the Committee on Foreign Investment in the United States (CFIUS) and the inter-agency committee is reportedly scrutinizing inbound deals — particularly those targeting technology firms.
US President Donald Trump has blocked Broadcom Ltd’s US$142 billion bid for Qualcomm Inc, citing national security concerns.
Taiwanese companies have traditionally attracted international attention for their prowess in the semiconductor sector, and are increasingly looking to have a global presence through M&As, the report said.
In March, the Netherlands-based NXP Semiconductors NV sold a 40 percent stake in Suzhou ASEN Semiconductors Co (蘇州日月新半導體) to Advanced Semiconductor Engineering (ASE, 日月光半導體), a Taiwanese supplier of semiconductor services, for US$127 million.
The deal gave ASE access to the rapidly growing global semiconductor assembly and testing sector, the report said.
In another example, Taiwanese firm Ta Chen Stainless Pipe Co (大成不銹鋼工業) in March last year acquired a 95 percent stake in US company Empire Resources Inc for US$177 million.
The transaction would increase Ta Chen’s scale of operations, as well as its efficiency and competitiveness in the industry, it said.
While the technology, media and telecoms sectors attracted the highest value of overseas deals from Taiwanese firms between 2016 and the first quarter of this year, the industrial and chemical sectors generated the highest number of transactions during the period, the report said.
The government is this year focusing on the promotion of industrial competitiveness abroad, with an emphasis on advanced manufacturing equipment, advanced electronics, integrated applications in smart systems and 5G wireless technology.
It aims to grow the healthcare sector, particularly pharmaceuticals and biotech.
In support of this, local firms are likely to continue looking abroad to increase their capabilities and source innovative technologies, White & Case said.
A convergence of the industrial and tech sectors, spurred by a need to stay ahead of the competition, should encourage Taiwanese firms to look for more overseas acquisition opportunities, it said.
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