GCS Holdings Inc (環宇通訊) yesterday said its board has agreed to sell the firm to Chinese LED giant Sanan Optoelectronics Co (三安光電) for US$226 million, or US$3.32 per share.
GCS, which supplies compound semiconductor wafers, plans to complete the deal with Sanan and to be delisted from the over-the-counter exchange before the end of August, the company said at a press conference at the Taipei Exchange.
The deal aims to integrate the two companies’ resources in compound semiconductor technologies and production capacity, GCS said. It will also expand the company’s operating scale, improve its profitability and raise its competitiveness in the global market, it said.
GCS is a Cayman Islands-registered firm with its operations mainly in the US. It set up a sales subsidiary in Taiwan in March 2011 and its shares were listed on the Taipei Exchange in September 2014.
The deal with Sanan is subject to a shareholder approval, as well as reviews by the Investment Commission in Taiwan and the Commission on Foreign Investment in the US.
As GCS sells some products with military uses to US clients, the US authority is likely to scrutinize Sanan’s planned acquisition of GCS, Investment Commission Executive Secretary Emile Chang (張銘斌) said, adding that there is a possibility that the deal may not receive US clearance on national security concerns.
However, if the acquisition gets the US government’s approval, then the Investment Commission is likely to approve Sanan’s planned purchase of GCS’ Taiwan operations, Chang said.
“The operation of its subsidiary in Taiwan is relatively simple and less sensitive compared with its parent company’s operations in the US,” Chang said by telephone, adding that the commission has not yet received notification of the sale.GCS’ net income grew 65.56 percent year-on-year to NT$276.25 million (US$8.53 million) last year, with earnings per share rising to NT$4.95 from NT$3.32 a year earlier.
The company’s board has proposed paying a NT$2.5 dividend — a cash dividend of NT$0.25 per share and a stock dividend of 22.5 percent — which translates into a payout ratio of 50.50 percent, lower than the 60.2 percent ration the previous year.
The planned dividend distribution has a yield of 0.27 percent, based on the company’s shares closing price of NT$92 in Taipei trading yesterday.
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