TPK Holding Co (宸鴻), a touch sensor supplier for Apple Inc’s iPads, yesterday said it has joined a consortium that is to invest ￥60 billion (US$535.9 million) for a 50 percent stake in ailing Japan Display Inc (JDI), as it seeks to secure its display supply and broaden its customer base.
The announcement ended three months of speculation about TPK’s involvement in talks to help the financially troubled Japanese display supplier.
Two months ago, TPK dismissed such speculation, saying that it could not afford to bankroll a company that was much bigger than itself.
Changing its tune, TPK yesterday said it has signed a letter of intent to invest US$230 million in a consortium, Suwa Investment Holdings LLC, that would acquire a 49.82 percent stake in Japan Display.
With the investment, the Taipei-based firm would be the largest stakeholder of Suwa with a 41.8 percent share, TPK said in a filing to the Taiwan Stock Exchange.
The consortium plans to subscribe to ￥42 billion in new shares issued by Japan Display and to ￥18 billion in convertible bonds issued by the Japanese firm, TPK said in the statement.
Should Japan Display need more cash to fund its operations, the consortium might invest another ￥120 billion by subscribing to a convertible bond issue, the statement said.
Aside from TPK, the consortium is composed of China’s Harvest Tech Investment Management Co (嘉實科技) and two investment firms — Cosgrove Global Ltd and Topnotch Corp — owned by Fubon Financial Holding Co’s (富邦金控) Tsai (蔡) family.
Harvest and the Tsai family hold 34.5 percent and 23.6 percent of Suwa’s shares respectively.
TPK also inked an agreement with Japan Display to form a display business alliance, aiming to boost its role in the display supply chain, enlarge its customer base and expand its market share in automotive displays.
TPK said it has sufficient cash to fund the deal.
As of Dec. 31 last year, it had NT$17.06 billion (US$552.46 million) in cash on its book, company data showed.
“The investment should have a positive impact on TPK, as the company will secure stable panel supply from JDI,” said David Hsieh (謝勤益), a senior display analyst with IHS Markit Technology.
“The deal, if realized, will also give TPK a ticket to enter Apple Watch’s supply chain,” Hsieh added.
Japan Display is in the process of qualifying its displays for the Apple Watch and might start supplying the US company at the end of this year at the earliest, he said.
TPK has been trying to break into the automotive display market, but has not made substantial progress, but investing in Japan Display could be a shortcut to achieving that goal, Hsieh said.
“JDI is a good pick as it is the world’s largest supplier of displays used in cars,” Hsieh said.
Japan Display counts auto part supplier Denso as one of its major clients, he said.
Nonetheless, the risk remains, as JDI has failed investors in turning around its operations following several round of cash injections, he said.
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