Handset panel driver IC designer Ili Technology Corp (奕力) yesterday announced that its board has approved an acquisition by a subsidiary of MStar Semiconductor Inc (晨星半導體).
The company is to be acquired at NT$51 per share, representing a 15.52 percent premium to its closing price of NT$44.15 yesterday in Taipei trading.
The estimated NT$3.67 billion (US$112 million) deal is expected to be completed before the end of the second quarter next year, the company said in a filing with the Taiwan Stock Exchange.
Yuanta Securities Investment Consulting Co (元大投顧) analyst Steve Huang (黃柏璁) said in a research note that Ili Technology is likely to benefit from its buyer’s abundant resources, which could aid in developing new full high-definition and touch display driver integration (TDDI) solutions.
MStar itself was acquired by MediaTek Inc (聯發科), the nation’s leading fabless chip designer, last year. Therefore, the latest deal is likely to allow MediaTek to obtain Ili Technology’s portfolio of intellectual property and enable Goodix Technology Inc (匯頂科技), MediaTek’s touch IC subsidiary, to develop emerging TDDI products, Huang said.
Huang said he expects consolidation in the handset display driver industry to continue and that players such as Synaptics Inc, Novatek Microelectronics Corp (聯詠) and Himax Technologies Inc (奇景光電) in the high-end market and FocalTech Systems Co Ltd (敦泰科技) and Sitronix Technology Co (矽創) in the low-end segment might see their investment sentiment rise as they come into the sights of prospective buyers.
However, other analysts said yesterday’s deal could negatively impact other handset display driver vendors, such as FocalTech, Himax and Novatek, depending on the amount of resources MediaTek allocates to Ili Technology.
The deal might have negligible effects on financial metrics, such as price to earnings ratio, for MediaTek, according to Yuanta’s estimate.
However, from a product and sales perspective, the acquisition is not expected to yield tangible synergistic upsides from a more integrated supply chain for MediaTek, as Ili Technology’s clients are panel makers, while the chip designer primarily ships to handset manufacturers, Yuanta analyst George Chang (張家麒) said.
Nevertheless, Chang said the rationale behind the acquisition might be that MediaTek wanted to prevent Ili Technology from falling into the hands of a Chinese rival amid mounting concern over the “red supply chain” across the Taiwan Strait.
Ili Technology shares have dropped 36.66 percent so far this year in Taipei trading and those of MediaTek have declined 50.32 percent over the same period, closing at NT$229.5 yesterday.
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