Shares of electronics maker Lite-On Technology Corp (光寶科技) rose 1.27 percent after its board approved a plan to buy a big stake in a Taiwanese maker of light-emitting diodes (LED) for a maximum NT$1.3 billion (US$39.4 million) via private placement and buying of common shares.
Lite-On shares rose NT$0.6 to NTS47.7 yesterday, defying the TAIEX's 0.63 percent drop.
Lite-On will buy 7.74 million shares, or 72 percent, of Leotek Electronics Corp (光林電子) at a price ranging from NT$15.5 to NT$25 per share through its venture capital subsidiary Lite-On Capital Corp (源泰投資), the firm said in a filing to the Taiwan Stock Exchange on Monday night.
"We believe LEDs are a promising business with growing demand, primarily from traffic signals and street lamps. The market has become a new battlefield [for local electronics seeking growth drivers]," a Lite-On public relations official who wished to remain anonymous said by telephone yesterday.
Sales of the LEDs in the US, the world's biggest LED market, are expected to grow at a 45 percent composite annual rate in the next four years, Lite-On said.
As more than 93 percent of traffic signals in the US have been converted from incandescent bulbs to power-efficient LEDs, local US governments are likely to switch their street lights to LEDs, which will provide a huge business opportunity, the firm said.
With Leotek's strong position in the LED traffic signals market, Lite-On said it will be able to boost its presence in the US and Chinese LED traffic light markets.
Leotek has a 30 percent share of the US' LED traffic light market, just behind GE.
Lite-On said it planned to use the cash it generated from its operations to buy Leotek shares.
Lite-On posted lower net income at NT$3.89 billion, or NT$1.43 per share, for the first six months of this year, down 2.75 percent from NT$4 billion, or NT$1.51 per share, a year ago.
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