Celxpert stock falls after DynaPack deal fizzles out

By Jason Tan  /  Staff reporter

Fri, Dec 17, 2010 - Page 12

Shares in Celxpert Energy Corp (加百裕工業), Taiwan’s third--largest notebook battery pack maker, dipped 4.6 percent yesterday to close at NT$1.85 after its planned merger with bigger rival DynaPack International Technology Corp (順達) failed to materialize.

Both firms announced on Wednesday that the merger plans are to be scrapped and that would void their stock-swapping contract.

DynaPack announced on Aug. 6 it would merge with Celxpert Energy through a stock swap of one DynaPack share for 1.7 Celxpert shares, with DynaPack to be the surviving entity.

The deal was to cost DynaPack NT$5.8 billion (US$193 million).

However, the two firms had disagreements over the swapping ratio after inking the deal and both decided to scrap the plan.

The merger was intended to boost DynaPack’s economies of scale, enabling it to purchase battery cells from overseas makers at lower prices.

Taiwanese battery pack makers are currently paying more for battery cells than their South Korean and Japanese peers, which produce cells as well as package them into battery modules.

Celxpert said on Wednesday that it will resume its expansion plans halted because of the merger, and is evaluating new site locations in the cities of Chongqing and Chengdu in Sichuan Province, China.

DynaPack stock appeared unaffected by the incident, closing up 1.2 percent to NT$1.2 on the Taiwan Stock Exchange yesterday.

The Fair Trade Commission had given the green light to the merger in early September, citing no monopoly concerns.

The commission said the market share of the merged entity would still lag far behind those of Simplo Technology Co (新普科技), Taiwan’s largest and the world’s second-largest maker whose battery packs are used in iPads.

According to Yuanta Research analyst Dennis Chan (詹宗勳), Simplo and DynaPack compete head-to-head in the tablet PC market, with Simplo commanding a 50 percent share and DynaPack 30 percent.

“Both firms lead in lithium polymer battery technology, which allows them to be the big guys in supplying those battery packs to tablet PC makers,” Chan said.