WPG Holdings Co (大聯大投資控股) said on Saturday evening it would acquire Yosun Industrial Corp (友尚) in a share swap deal. The merged entity will become the first semiconductor components vendor with annual revenues exceeding US$10 billion in the Asia Pacific.
WPG Holdings is the largest vendor of its kind in Asia and the third-biggest globally after Phoenix-based Avnet Inc and Melville, New York-based Arrow Electronics Inc.
Yosun is the second-largest semiconductor component distributor in the Asia-Pacific region, with clients including Samsung Electronics Co, STMicroelectronics NV, Fairchild Semiconductor International Inc and Texas Instruments Inc.
In a joint press statement on Saturday, the two companies said their board of directors had approved the 100 percent share swap, in which Yosun will exchange one of its shares for 0.902 shares of WPG Holdings.
With shares of WPG Holdings closing at NT$53.2 on Friday and Yosun ending the day at NT$40, the deal gives Yosun shareholders a 19.97 percent premium.
The two companies did not disclose the value of the share swap. As Yosun had 369.96 million issued shares on Dec. 31 and based on that figure, the deal values the Neihu, Taipei-based company at NT$17.75 billion (US$558.2 million).
The merged entity will have a combined capital of NT$12.64 billion, NT$316 billion in total revenue and a net profit of NT$5 billion. The deal is expected to be approved by shareholders in June and completed on Nov. 15, the statement said.
“Through this deal, we gained a highly experienced management team and complementary product lines,” WPG Holdings chairman and president Simon Huang (黃偉祥) said in the statement.
Under the terms of the deal, Yosun will be de-listed from the local bourse after Nov. 15, but will maintain its independent status under WPG Holdings. In addition, Yosun chairman Tseng Kuo-dong (曾國棟) will stay at his post and also serve as the new chief strategic officer at WPG Holdings.
WPG Holdings was formed in 2005 with the merger of electronic parts distributors WPI Group (世平集團), SAC Group (品佳集團) and RichPower Group (富威集團), with customers including Intel Corp, NXP Semiconductors, Texas Instruments, Hynix Semiconductor Inc, Micron Technology Inc and Infineon AG, as well as MediaTek Inc (聯發科) and Winbond Electronics Corp (華邦電子) in Taiwan.
Over the past two years, the company has acquired Pernas Enterprise Co (凱悌) and AIT Group (詮鼎集團), strengthened its foothold in China and expanded into higher-margin components business as new growth drivers.
“WPG should continue to outgrow the Asian semiconductor market with progress in market share gains. Given WPG’s leading position in China and strong customer service, we also expect WPG to benefit from opportunities created by industry consolidation,” Citigroup analyst Eve Jung (戎宜蘋) wrote in a research note on Jan. 29, after the company released last year’s financial figures.
Last year, WPG Holdings saw net profit surge 89.2 percent year-on-year to NT$3.48 billion, or NT$3.94 per share. Revenue rose 37.5 percent to NT$196.96 billion, with its gross margin up 0.07 percentage points to 5.65 percent and operating margin up 0.2 percentage points to 2.28 percent.
For this quarter, the company said it expected revenues to be flat or to decline by as much as 5 percent from last quarter to between NT$51 billion and NT$53 billion, citing tight component supply.
Gross margin is expected to be between 5.3 percent and 5.5 percent in this quarter, while operating margin will rise to between 2.1 percent and 2.3 percent, from 1.9 percent in the previous quarter, on lower expenses.
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