Hong Chuan Investment (鴻傳投資), an investment company under FAT Capital Management Co (遠邦投資管理), announced yesterday it would begin the acquisition of Primax Electronics Ltd (致伸電子), the world's second-largest contract manufacturer of computer mice, at NT$18 (US$0.54) per share.
The private equity fund will purchase 45.774 million shares -- or 10 percent of Primax's outstanding shares -- from yesterday to the end of next month, Hong Chuan said in a statement.
The tender price represented a 9.56 percent premium on the stock's average closing price over the past 30 days and higher than its average share price over the past six years, the statement said.
The offer price was also 13.2 times Primax's earnings last year, higher than the industry's average price-earnings ratio of 11.72 times, it said. Primax shares were NT$17.3 yesterday.
Once the purchase of 10 percent of the shares has been completed, Hong Chuan said it plans to buy the remaining 90 percent, also at NT$18 per share.
"The offer will help position Primax as it expands through future mergers and acquisitions, seen as essential for long-term success in today's crowded contract electronics manufacturing business," the statement said.
Founded in 1984, Primax supplies a wide range of consumer and business electronics, including scanners, printers, mice, shredders, bluetooth accessories and headsets.
By bringing in strategic investors with international experience in mergers and acquisitions and industry integration on the board, Primax's will be in a better position to become a leading global supplier of information technology peripherals, Hong Chuan chairman Stephen Tsuei (
The buyout will not alter the management team at Primax, he added.
Tsuei was a board director at Primax for over 10 years and has a thorough understanding of the company and its managers, chief financial officer Jerry Chang (張德財) said in a telephone interview, adding that Tsuei had resigned from the position last year.
Primax is upbeat about the buyout and chairman Raymond Liang (
Apple Holdings, registered in the Cayman Islands, was set up for the buyout plan, company spokesman Jack Chiang (
The premium is not high, and Primax's market price is very likely to rise further after the buyout announcement, said Alan Tseng (
Stocks reached NT$18.2 in January -- the highest this year -- after it was reported that Primax had received orders to assemble Apple Inc's iPhone, Tseng said.
Without further expansion or industry integration, the company's business outlook remains stagnant rather than showing growth momentum, Tseng said.
Primax's earnings rose 53 percent to NT$611.42 million, or NT$1.36 per share, last year. Sales declined 3.82 percent to NT$3.31 billion for the first quarter of this year.
The company has not yet released its financial report for the first quarter.
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