Hon Hai Precision Industry Co (鴻海精密) has unveiled a plan to buy a personal computer plant in Poland from Dell Inc, the latest in a slew of acquisition deals with customers in recent years.
The deal, announced late on Wednesday, would be the second similar acquisition this year following the purchase of Sony Corp’s TV plant in Mexico in September.
Hon Hai has also bought plants from clients — including Hewlett Packard Co, Nokia Corp and Motorola Inc — over the past few years to expand its business.
“Hon Hai is already a major desktop PC and server supplier to Dell, [but] this plant acquisition may imply further gains into Dell’s business,” Vincent Chen (陳豊丰), head of Yuanta Securities’ (元大證券) downstream technology research team, said in a report released yesterday.
“Hon Hai can leverage the deal to compete for Dell’s notebook ODM orders in 2011,” Chen said.
Hon Hai said in an exchange filing on Wednesday that it had signed an agreement via its subsidiary, PCE Paragon Solution Kft, to purchase the assets from the US firm’s subsidiaries — Dell Global BV and Dell International Holdings VIII BV.
The purchase would put Hon Hai in direct competition with Dell’s other desktop PC suppliers, including Asustek Computer Inc’s (華碩電腦) PC manufacturing arm Pegatron Corp (和碩聯合), Lite-On Technology Corp (光寶科技) and Wistron Corp (緯創), as well as Quanta Computer Inc (廣達電腦), which makes computer servers for Dell.
Hon Hai said it planned to complete the asset transfer in the second half of next year. It did not disclose the amount of the deal.
Following the transfer, Dell, the world’s No. 3 PC maker, will continue to source desktop and notebook computers, servers and storage systems for customers in the European, Middle East and Africa area from Lodz, Poland, via Hon Hai, the US company said in a statement posted on its Web site.
The move will enable Dell to provide even greater value to customers by further simplifying Dell’s global operations and making them more efficient, the US company said.
Chen, however, expects limited benefits from the purchase next year. He retained his “hold” rating on Hon Hai.
Market response to the deal was also muted, with Hon Hai’s stock inching up 0.36 percent to close at NT$138.50 yesterday, slightly outpacing the benchmark TAIEX, which edged up 0.09 percent higher.
Standard & Poor’s Ratings Services said yesterday its ratings on Hon Hai would not be affected by the acquisition, given its limited scale relative to Hon Hai’s already strong PC business.
“We believe that the financial impact of the acquisition on Hon Hai is limited, given Hon Hai’s cash and liquid financial investments of NT$119 billion at the end of September,” S&P said in a statement.
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