Hitachi Ltd has decided to change its tender offer for Taiwanese elevator supplier Yungtay Engineering Co Ltd (永大電機), the Japanese company said in a statement on Friday.
Hitachi said it would raise the public offer by NT$5 per share to NT$65 to acquire Yungtay’s common shares on the open market through its subsidiary Hitachi Elevator Taiwan Co Ltd (台灣日立電梯).
The new offer represented a premium of 8.5 percent compared with Yungtay’s closing price of NT$59.9 in Taipei trading on Friday.
“Hitachi made this decision for the purpose of encouraging shareholders of Yungtay to tender their shares and achieving its objective of this public tender offer faster and smoother by providing an attractive opportunity to more shareholders of Yungtay,” the firm said.
Hitachi on Friday applied to the Financial Supervisory Commission for the price change, it said.
Tokyo-based Hitachi has been a Yungtay partner for more than 50 years.
The Japanese conglomerate owns 11.7 percent of Yungtay’s shares and it intends to gain 100 percent ownership of the Taipei-based firm with the offer, making the latter a wholly owned subsidiary.
The maximum number of shares to be acquired in the tender offer, starting on Jan. 17 and running through April 22, is 360.96 million, the equivalent of 88.32 percent of Yungtay’s issued shares, with the minimum number for the acquisition set at 88.5 million shares, or 21.66 percent, Hitachi said.
Hitachi said that it aims to improve the competitiveness of its products and maintenance services by combining Yungtay’s product lineup with advanced technology such as the Internet of Things.
The deal is expected to boost Hitachi’s elevator and escalator business in China and Asia, while accelerating the global expansion of its product and service businesses, it said.
Hitachi said that it is the sole buyer in the deal and has not received reports of any competing bidders.
However, Yungtay independent director Chen Shih-yang (陳世洋) is opposed to the tender offer and has proposed to convene an extraordinary shareholders’ meeting on April 18 to elect a new board of directors.
The current board might be harming shareholders’ interests by turning down better deals, he said earlier this year.
Hitachi on Friday said that its offer of NT$65 per share for Yungtay shares is appropriate, citing two valuation reports.
A report by L&L, Leaven & Co, CPAs (律盟聯合會計師事務所) said that a fair value for Yungtay shares would be between NT$40.27 and NT$68.31 per share, while another report by BDO Taiwan (立本台灣聯合會計師事務所) said it would be between NT$55.15 and NT$67.83 per share.
“The offer price is within these ranges,” Hitachi said.
Yungtay, established in 1966 with capital of NT$4.11 billion (US$133.4 million at the current exchange rate), is a leading elevator and escalator supplier in Taiwan and China, with 5,149 employees as of Dec. 31, 2017.
The company reported consolidated revenue of NT$14.86 billion and an operating profit of NT$975.63 million last year, compared with the previous year’s NT$16.75 billion and NT$1.48 million respectively.
Net profit in the first three quarters of last year decreased 39.45 percent to NT$590 million from a year earlier, with earnings per share of NT$1.44.
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