In its second acquisition in the space of six weeks, local flat-panel maker Innolux Display Corp (群創光電) announced yesterday that it would acquire its bigger, loss-making rival Chi Mei Optoelectronics Corp (奇美電子), enabling the merged entity to replace AU Optronics Corp (友達光電) as the country’s largest liquid-crystal-display (LCD) maker.
Innolux, the world’s second-biggest maker of liquid-crystal-display (LCD) PC monitors, is to acquire Chi Mei, the nation’s No. 2 maker of LCD panels used in PCs and TVs, in a share swap deal, the two companies said in a joint statement to the Taiwan Stock Exchange.
Innolux is a Miaoli-based subsidiary of Hon Hai Precision Industry Co (鴻海精密), the world’s largest contract electronics manufacturer.
Under the terms of the deal, Innolux will swap one of its shares for 2.05 shares of Chi Mei, the companies said in the statement. With shares of Innolux closing at NT$47 on Friday and Chi Mei ending the day at NT$18.80, the deal gives Chi Mei shareholders a 22 percent premium.
The merged entity — to be named Chimei Innolux Corp (奇美電子) — will have a combined capital of NT$119.56 billion (US$3.7 billion) and the merger is expected to be completed on May 1, the statement said.
AU Optronics has paid-in capital of NT$88.27 billion.
The global market share of the new company would be about 17 percent, outranking AU Optronics’ 16 percent, data compiled by market researcher DisplaySearch showed.
The two companies did not disclose a value for the share-swap deal.
Chi Mei had 8.71 billion issued shares as of March 31 and based on that figure the deal values the Tainan-based company at NT$199.7 billion. On Oct. 5, Innolux announced a NT$20 billion merger with TPO Displays Corp (統寶光電), also via a share-swap deal.
“It [merging with Innolux] was the most difficult decision in my life, as the potential merger partners are all good,” local cable TV network UBN quoted Chi Mei Group (奇美集團) founder Hsu Wen-lung (許文龍) as saying at a press conference yesterday in Taipei.
He said the company had also previously engaged in merger talks with AU Optronics.
Hon Hai chairman Terry Gou (郭台銘) said the new company was in a good position to become a key player.
“Right now the four biggest players [Samsung Electronics, LG Display, AU Optronics and Chimei Innolux] are entering a final,” local cable channel ETTV quoted Gou as saying. “We would like to be in the world’s top three.”
Chi Mei chairman Frank Liao (廖錦祥) and his Innolux counterpart, Tuan Hsing-chien (段行建), yesterday signed the merger deal on behalf of the two companies at the press conference. Liao is to become the new firm’s chairman, while Tuan will serve as both chief executive officer and president.
“The two companies complement each other, as Chi Mei enjoys an advantage in capacity, product mix, open cell business and customer portfolio, while Innolux is strong in manufacturing and integrating,” Liao said in the statement.
Tuan said the merger of two panel makers would end up benefiting their downstream customers.
The merger of Chi Mei and Innolux is likely to be the precursor of other potential deals in the industry, as there is speculation that smaller panel maker Chunghwa Picture Tubes Ltd (中華映管) is in merger talks as well.
“We are still thinking about that possibility,” UBN quoted Chunghwa Picture chairman Lin Wei-shan (林蔚山) as saying yesterday.
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