Opto-electronic components maker Lite-On Technology Corp (光寶科技) yesterday said its board had approved a proposal to acquire a US-based power management solutions provider for US$18.3 million.
The plan to acquire a 100 percent stake in Power Innovations International Inc, based in American Fork, Utah, will give Lite-On access to uninterruptible power system (UPS) technology for global aviation, exploration, military and other industrial and medical applications, the company said in a statement.
The cash deal is also expected to strengthen Lite-On’s power management and system integration capabilities in the field of cloud computing, the company said.
“We hope to complete the deal by the end of the year, after it is approved by the respective companies’ boards and shareholders,” Julia Wang (王玉玲), director of Lite-On’s investor and public relations, said by telephone.
She said Lite-On would send a team from Taiwan to join the management of Power Innovations, but added that the privately held company’s management — including chief executive officer Robert Mount — would stay in their positions.
Lite-On is the nation’s second-largest power supply provider after Delta Electronics Inc (台達電). According to the company’s balance sheet, it had NT$54.4 billion (US$1.82 billion) in cash and cash equivalents as of the end of the first quarter of this year, total assets of NT$195.53 billion and total liabilities of NT$117.61 billion.
The latest acquisition follows the company’s recent merger with Lite-On IT Corp (建興電子), which is one of the world’s leading optical disc drive suppliers, with a global market share of up to 30 percent.
Both deals are consistent with the company’s business strategy to diversify into four high-margin businesses — cloud computing, camera modules, LED components and lighting modules, and solid-state drives (SSD) — at a time when the weakness in the global PC market poses a lingering concern to the company.
The combined sales of these four high-margin businesses account for about 35 percent of Lite-On’s total annual revenue, while those of PC-related applications contribute more than 40 percent, company data showed.
Lite-On last week said its consolidated revenue in the second quarter reached NT$49.94 billion, up 6.8 percent quarter-on-quarter. However, accumulated revenue in the first half of the year fell 10.46 percent year-on-year to NT$96.37 billion.
Management said earlier that the merger with Lite-On IT, which is expected to close at the end of the year, could lead to a more than 40 percent increase in Lite-On Group’s annual sales and about 20 percent growth in earnings.
The company yesterday did not elaborate on the potential revenue and earnings accretion from the acquisition of Power Innovations. However, chief executive officer Warren Chen (陳廣中) said the company would capitalize on the operational efficiency enhancement through the deal by means of the mutual integration of manufacturing, technology, supply chain management and sales channels.
“Lite-On aims to become a total solution provider of power management in the cloud computing market in the long run,” Chen said in the statement.
Power Innovations, established in 1997 with about 50 employees, has gained a bigger market share in customized power solutions in recent years, with key customers in the commercial, military, government, oil exploration and homeland security fields.
The US company has reported more than 40 percent growth in annual sales over the past few years to about US$8 million to US$10 million, Wang said.
“I believe Power Innovations can become a strong, high-performing asset for Lite-On,” Mount said in the statement.
Lite-On announced the acquisition plan after the stock market closed. Its shares were unchanged at NT$52. The stock has risen 34.89 percent so far this year, outpacing the TAIEX, which advanced 7.21 percent over the same period.
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