Shares of Chunghwa Picture Tubes Ltd (CPT, 中華映管) surged more than 6 percent in midday trading yesterday amid renewed speculation that it was a merger target of the nation’s No. 2 LCD panel maker, AU Optronics Corp (AUO, 友達光電).
According to a Reuters report, CPT was in merger talks with AU Optronics, which if successful, would put AU Optronics back in the third spot in the global LCD industry.
AU Optronics’ world ranking dropped to No. 4 after a three-way merger in March led to the formation of Chimei Innolux Corp (奇美電子).
The merger talks rekindled CPT investors’ hope that they could get rid of the unprofitable stock, said Roger Yu (游智超), a flat panel industry analyst with Polaris Securities Co (寶來證券).
The company’s past efforts to seek a strategic or equity investor have failed, Yu said.
CPT have reported cumulative losses of NT$67.77 billion (US$2.2 billion) over the past nine quarters as it became more vulnerable to the industry’s ups and downs compared with its bigger rivals because it has less flexibility in shifting capacity to make panels whose prices are less subject to price swings.
However, Yu was skeptical of a merger.
“There is no reason for AU Optronics to initiate an M&A [merger and acquisition] deal to expand capacity [in Taiwan] at the moment,” Yu said. “We will only get excited when AU Optronics receives government approval to invest in China.”
In March, AU Optronics submitted a proposal to invest US$3 billion to build a 7.5-generation fab in China to make LCD TV panels. The company hopes to mass produce panels from its first Chinese plant in 2012. The proposal is still under government review.
“Such speculation [on a merger] has been circulating again and again. We have no comment on that,” AU Optronics spokesperson Hsiao Ya-wen (蕭雅文) said by telephone.
AU Optronics has said that its priority now is boosting the value, or margins, of its products, rather than expanding capacity.
Chunghwa Picture said in a filing to the Taiwan Stock Exchange that the “company will not rule out the possibility of cooperating with peers and companies in the [LCD] supply chain industry, but it has no substantial plan, or conclusion yet.”
AU Optronics shares plunged 1.65 percent to NT$29.75 yesterday, while the benchmark index declined 1.43 percent.
CPT shares retreated from an intraday high to close up 3.65 percent at NT$4.54.
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