Semiconductor component distributor WPG Holdings Co (大聯大), which on Friday cut its third-quarter revenue forecast to take into account inventory adjustments in the PC supply chain, yesterday announced it would acquire Aeco Technology Co (大傳) in a share swap deal.
In a statement posted to the Taiwan Stock Exchange, WPG Holdings said the firm’s board of directors had approved the 100 percent share swap, in which Aeco Technology will exchange one of its shares for 0.455 shares in WPG Holdings.
With shares of WPG Holdings closing at NT$32.5 yesterday and Aeco Technology ending the day at NT$13.2, the deal gives Aeco Technology shareholders a 12.03 percent premium.
The two companies did not disclose the value of the share swap. Based on Aeco’s 163.05 million issued shares as of Dec. 31, the deal values the company at NT$2.41 billion (US$78.59 million).
The merged entity will have combined capital of NT$17.47 billion and NT$166.75 billion in total revenue in the first half of this year, and a pre-tax profit of NT$3.49 billion in the same period, company data showed. The deal is expected to be approved by shareholders on Nov. 23 and set to be completed on March 1 next year, the statement said.
WPG Holdings said it expected the acquisition, after securing approval from both shareholders and regulators, would help the company expand its scope and increase its global competitiveness as the PC supply chain is now facing weaker demand amid global economic uncertainty.
On Friday, the company announced after the closure of the local stock market that it had lowered its forecast for third-quarter sales to increase by 4.8 percent to 6 percent, compared with the previous estimate of a sequential growth of between 8 percent to 12 percent made in late July.
WPG Holdings said in an exchange filing that the sales growth revision was mainly because of weaker PC-related component demand and continued inventory buildup at major contract PC makers.
In the past two days, investors have dumped the company’s shares, which has seen the stock drop 8.84 percent, stock exchange data showed.
In the first eight months, WPG reported consolidated revenue of NT$219.43 billion, up 33.53 percent from NT$164.53 billion a year earlier. It is expected to report sales data for last month and the first nine months later this week.
Zona Chen, a Hong Kong-based analyst at Samsung Securities (Asia) Ltd, on Monday offered a “buy” rating on the company, but cut her target price for WPG from NT$55.05 to NT$44.3.
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